How this calculation works
Start with equal capital. The finance path invests price less deposit and makes loan payments from its monthly budget. The cash path invests that same monthly payment instead. Compare investments after the loan term; identical vehicle values cancel out.
A worked example
With zero loan interest, zero investment return and no fees, both paths end with the same financial wealth. Positive finance costs require investment growth to offset them.
Assumptions & limitations
- This assumes retained cash is actually invested, returns are after tax and fees, and both paths have equal monthly budgets. Market returns are not guaranteed. No balloon, cash discount, early settlement or differences in vehicle costs are modelled.
