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Is it cheaper to buy a truck at $60k 0% interest or $45k at 4% interest?...

Is it cheaper to buy a truck at $60k 0% interest or $45k at 4% interest? Explain. 4 years or 5 years

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Answer #1

It would be cheaper to buy a truck for $45k @ 4% interest rather than $ 60k @ 0% interest.

If we calculate the intrest on $ 45k on simple intrest anually then the total amount payable for 5 years   = 45000(1 + (0.045 × 5)) = 55125

Which is $ 4875 less than $ 60k without intrest.

Again if the intrest is calculated on the compounded basis for 5 years

Time Principal Interest Total

Monthly 45000 11330 56330

Quarterly 45000 11283 56283

Half yearly 45000 11214 56214

Yearly 45000 11078 56078

Where all the amount are less than $ 60k. So it would be cheaper to get truck for $ 45k @ 4.5% intrest rather than $ 60k without intrest.

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