CONSUMER LOAN CHOICE TABLES

CURRENT LOAN RATES TABLE

BanxQuote Website

Which is the Lower Cost Alternative for Financing the Car:  A Used Car Loan or Home Equity Loan?

Assumptions: The amount needed to finance the purchase of a one year old  used car is $10,000.  You live in Arkansas and have a $70,000 equity in your home.  You are in the 15 percent marginal federal income tax bracket (the highest tax rate to which a portion of your income is taxed is 15 percent).

Type of Loan
Arkansas Average
Regional Average
National Average
Used Car Loan on a One Year Old Car1                       %                 %                 %
Five Year Home Equity Loan2                       %                 %                 %

 1From the "Get Rates" menu, select "Auto Loan" as the type of loan and "Arkansas" as the place.

2From the "Get Rates" menu, select "Home Equity" as the type of loan and "Arkansas" as the place.  Scroll down the page to view the information requested in the above table.

 
Based on your reading of the article ""Drive Down Your Cost of Financing a Car" at the Money Central Website, the information in the above table, and the assumptions detailed above the table, which loan would be the lower cost alternative?  Justify your response, including at least one quote from the Money Central article.
 
 
 
 
 
 
 

BORROWING POWER CALCULATOR

PNC Bank Website

How Big an Additional Monthly Loan Payment Can I Afford?

Assumptions:  Gross income is $3,000 per month; you have one monthly debt obligation, a mortgage payment equal to $925.

Gross Monthly Income  
Total Monthly Loan/Credit Line/Credit Card Payments  
Results of Calculation:  Additional Estimated Amount You Can Pay Monthly  (or Affordable Monthly Payment)  

LOAN AMORTIZATION SUMMARY

Republic Title Company Website

Which Is Better:  A Three Year Loan or Five Year Loan?

Whether you chose a auto loan or a home equity loan earlier, it is now time to look at the effects of financing the $10,000 loan at an assumed interest rate of 7 percent for three or five years.

Term of Loan
Monthly Payment
# of Months
Total of  Payments
Total of Interest
Three Year Loan        
Five Year Loan        
 
Considering the Loan Amortization Summary, which loan term (three or five years), would you choose?  Justify your response.  

 

 
Considering the information in the Loan Amortization Summary and the results obtained earlier from the Borrowing Power Calculator, which loan term (three or five year) would  you have to choose?  Justify your response. 
 
 
 
 
 
 
 
What do your responses to the two previous questions teach you about the consequences of carrying a heavy debt load?