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IBC $40,000 Car Comparison
In life, most people will purchase a new car
or pay off an existing car loan.
This example considers the purchase of a $40,000 car using four
methods of payment - three traditional methods and the Infinite
Banking Concept.
The main source for comparison will be the total cost. |
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The Assumptions for the Illustration
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44 year time period with a new car purchase every 4 years.
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Traditional bank financing and IBC financing will be at 8% (loan
rate for purchase).
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Assumed
5% rate of return on your money (this is what your money may be
earning).
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Residual value on leases will be 35% of actual car value (cars
depreciate).
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Residual value will allow the same amount financed ($40,000)
each time with traditional bank finance and IBC.
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Your annual payment, bank financing, and IBC equals
$12,077.00.
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Option 1: Lease the Car
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$40,000 Lease
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$3,000 (or 7.5%) down at Delivery
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48 month lease period
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$850.00 monthly payments
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35% residual value
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3% inflation 5% rate of return
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Total Cash Paid for the Lease of the Cars = |
-$868,104 |
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Opportunity Cost = |
$1,637,407 |
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Total Cost = |
-$2,505,511 |
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Option 2: Bank Loan
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8% Interest Rate
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Finance $40,000 each time
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48 month loan
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$1,007.00 monthly payment
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3% inflation
5% rate of return
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Total Cash Paid for the Lease of the Cars = |
-$531,388 |
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Opportunity Cost = |
$1,385,234 |
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Total Cost = |
-$1,916,622 |
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$40,000 per car
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35% residual value
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3% inflation
5% rate of return
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Total Cash Paid for the Lease of the Cars = |
-$440,000 |
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Opportunity Cost = |
$1,264,965 |
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Total Cost = |
-$1,704,965 |
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Option 4: The Infinite Banking Concept
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$40,000 Car
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Future Cash
Value of Policy $1,916,622
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$1,007.00 monthly premium (deposits to your "bank")
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3% inflation
5% rate of return
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Total Paid=
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$531,388
Same as would be financed through a bank. Only you
paid this to your own policy, so it is a positive
number. |
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Opportunity Cost = |
$0.00 |
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Total RECAPTURED FUNDS= |
$1,916,622 |
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Oh, and at some point, you
will die. That's the "lagniappe" as we call it Down South, the death
benefit that would be paid to your heirs. Depending on how you
treated your IBC policy, it would likely be close to double the
cash-value. So, you can teach your children and grandchildren
stewardship even from the grave. Keep the money in the family.
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