How do I respond to the below post, whether I agree or disagree with the idea?

Mathematically LOAN 2 is the better option because you end up paying nearly $3500 in less interest. However, it is 100% dependent on the person applying for the loan; how much they want to put down, the length of the loan, and the amount they could afford. Your car loan should be no more than 10% of your take home pay. Or $0 in the eyes of Dave Ramsey. So loan 2 at nearly $1000 a month would mean you would have to make $10,000 a month to afford the a vehicle at that price comfortably. Loan 1 would mean you would need to make about $6700 a month to afford the vehicle comfortably. So assuming you do make either one of those amounts of money monthly, would be one of the main factors that would have to be considered.

My values did match the numbers that the AllState app provided. But the Allstate app has the number rounded down. So the extra few cents on the numbers could mean you would be paying a little more than the app had anticipated.

After going through many websites to find what the averages were for the price of a new car, interest rates, and what the most common car loan terms were, I used those numbers for my equations. There were no two websites that were the same, most of them had similar numbers, but I could not find a website that had matching numbers to another. So I used the numbers below that are close to the averages I could find for LOAN OPTION 1. For LOAN OPTION 2, I applied the same research.

LOAN 1:

$50,000 (AVERAGE PRICE OF A NEW CAR)

4.07% (AVERAGE INTEREST RATE FOR A CAR LOAN)

72 MONTHS (THE MOST COMMON CAR LOAN TERM)

15% DOWN

STEP 1 (FIND OUT THE PRICE OF THE CAR)

50,000 X (15%) = 7500

50,000 - 7500 = 42500 (THIS IS THE AMOUNT FINANCED)

FIND OUT THE PAYMENT EACH MONTH

42,500 X (.0407/12)(1+.0407/12)^72

DIVIDED BY

((1+.0407/12)^72)) -1

SIMPLIFIED:

144.1458333(1.276072258) / .276072258

183.940499 / .276072258 =

$666.28A MONTH FOR THE CAR PAYMENT.

HOW MUCH THE TOTAL WOULD BE-

$666.28 (72 MONTHS) =

$47972.16

TOTAL INTEREST:

$47972.16 - $42500 =

$5472 IN TOTAL REPAYMENT.

LOAN 2:

$50,000 (AVERAGE PRICE OF A NEW CAR)

5.46% (AVERAGE RATE FOR A CAR LOAN OF THIS TIME FRAME)

48 MONTHS

20% DOWN

STEP 1 (FIND OUT THE PRICE OF THE CAR)

50,000 X (20%) = 10,000

50,000 - 10,000 = 40,000 (THIS IS THE AMOUNT FINANCED)

FIND OUT THE PAYMENT EACH MONTH

40,000 X (.0546/12)(1+.0546/12)^48

DIVIDED BY

((1+.0546/12)^48)) -1

SIMPLIFIED:

182(1.243468487) / .2434684873

226.3112647 / .2434684873 =

$929.53A MONTH FOR THE CAR PAYMENT.

HOW MUCH THE TOTAL WOULD BE-

$929.53 (48 MONTHS) =

$44617.44

TOTAL INTEREST:

$44617.44 - $40000 =

$4617.44 IN TOTAL INTEREST.

DIFFERENCE IN LOANS:

47972.16 - 44617.44 =

3354.72 DIFFERENCE IN TOTAL INTEREST/REPAYMENT.

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