Suppose you have a car payment of $280.00 per month. If your consumer loan is paid off in twenty four months, you can began setting aside $280.00, plus the interest the bank pays you each month. If you do this faithfully, it will grow into a substantial amount toward paying for a new car you will need about three years later. With this plan, you should have more than enough saved to pay cash for your next car.
Please note that, in essence you the consumer are still financing your car on a sixty-month plan. The big difference in this plan and the sixty-month plan of the car loan industry is that you get all the benefits. On a sixty-month car loan using a minimal down payment, you would have to make payments to the lender for almost forty months before you can even sell your car for what you still owe on it. However, if you choose to pay off your car loan with this plan, using a large down payment, and only twenty-four months to pay, you will have much different results. At the end of forty-months, not only will your loan have long since been paid in full, but also you will already have accumulated sixteen months of payments towards your next car purchase.
Using the monthly payment amount of $280.00 and the twenty-four month bank note instead of being at the break-even point at the end of twenty-four months, you will already have saved $10,800.00 plus interest. With the trade in price of your old car, you should have more than enough cash to purchase a much nicer car than the one you trade in.
At the time you buy this second car with cash, if you continue to save the $280.00 car payment each month for the following sixty-months, when you decide to by another car, you will have saved $16,800.00 plus interest. This amount, along with your trade-in should put you in a position to choose a much better car than the last one.
This is a excellent form of rapid debt-reduction that consumers can utilize on any items financed.