K–*KK4KK/ÿ ñ H d ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿK03Lÿÿÿÿ ÿÿÿÿ# ÿÿÿÿgÿÿÿÿÿÿÿÿÿÿÿÿi(ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ ÿÿÿÿÿÿÿÿfÿÿÿÿÿÿÿÿ$%ò&ò'((
ðB)'*ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ-·ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿqqDÿ'ZERO_PCT.WK1 - Auto loan gimmick, "0% financing or $3000 off"@ÿ' - Copyright 2001, 2002 Joel Anderson3ÿ' The crime of the poor is stealing,0ÿ' the crime of the rich is fraud.ÿ'Zero-percent financing:Cÿ' "Zero-percent" isn't zero interest, it's prepaid interest.=ÿ' By law (Truth in Lending) and logic, the difference Cÿ ' between the cash price and the financed price is interest.Aÿ'"Zero-percent or $3000 off" financing is a gimmick wherebyEÿ'the interest charge is disguised by including it in the price.Bÿ'The difference between the cash value and financed-price is?ÿ'$3000. The fraudulently stated rate of interest is zero.Cÿ'Payments equal the loan amount divided by its term (months).+ÿ'Trading in, or adding a downpayment:Cÿ' Since the amount of interest is fixed in the higher price,<ÿ' reducing the size of the loan by trading in, or by >ÿ' adding a downpayment, increases the rate of interest.7ÿ'Paying off the loan early (shortening the term):Cÿ' Since the amount of interest is fixed in the higher price,Bÿ' shortening the term raises the rate. Lengthening the termDÿ' would lower the rate, which explains why the term is fixed.ÿ\=ÿ\=ÿ\=ÿ\=ÿ\=ÿ\=ÿ\=#ÿ'In the example below, given:>ÿ' 1. The vehicle can be purchased for cash, for $18,000Bÿ ' 2. The vehicle can be financed, at $21,000 (higher price):ÿ!' 3. The term offered is 2 years (i. e., 24 months)4ÿ"' 4. The downpayment is zero ("nothing down")=ÿ#' 5. The stated interest rate is zero ("zero-percent")@ÿ%'Calculate the interest rate by discounted cash flow [DCF]?ÿ'' NOTE: the first value in a DCF calc is always negative.<ÿ(' (Initialize the account by borrowing from it.)Cÿ*'In the example below, "zero-down, zero-percent financing" isDÿ+'really 15.26% (APR), true rate 16.38% (APY) financing. $2500 Fÿ,'down increases the interest rate to 17.60% (APR), 19.09% (APY)."ÿ.'--- Zero down, zero-pct ---#.'--- $2500 down, zero-pct ---.//
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