when 0% interest is more costly..
Posted on 2015-02-21
there is a scenario:
either 0% interest on loan for year but 5% fees.
8.9% interest on loan for 2 years.. but not fees.
what will be the cut-off in terms of months when the 8.9% will make more sense than the 0%. what will be the formula for determining that?
(example. if the loan will be paid back in 40 days, perhaps 8.9% is better? likewise, what is the crossing point in terms of months, when 0% becomes the better choice, in terms in savings on interest).