Cash vs Installment Purchase Calculator
Compare paying cash upfront versus installment financing. Factor in financing charges, upfront setup fees, and interest earned in high-yield savings.
Cash vs. Financing Opportunity Formula
Total Installments = (Monthly Payment × Months) + Fees; Net Installment Cost = Total Installments - Savings Yield Earned on Cash- Financing Premium: Extra cash paid through interest or merchant installment fees.
- Opportunity Cost: Yield earned if cash is kept in a 4–5% High-Yield Savings Account (HYSA) while paying installments.
Step-by-Step Worked Example
Calculation Steps:
How to Use This Calculator
Assumptions & Limitations
- Assumes cash balance in savings is drawn down linearly each month to pay installments.
Frequently Asked Questions
When is it smarter to choose installments over cash?
Financing makes mathematical sense when the installment plan is true 0% APR with zero setup fees, AND you maintain the cash in a high-yield savings account earning 4%–5% APY, while automating on-time payments.
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