In the Infinite Banking System, most people pay off a credit card or automobile.
We are going to look at a $40,000 automobile by comparing paying it off in four ways: three traditional and one nontraditional way, IBC.
Our main source for comparison will be total cost.
Leasing the Car
- $40000 Lease
- $3000 (or 7.5%) down at Delivery
- 48 month lease period
- $850.00 monthly payments
- 35% residual value
- 3% inflation 5 % rate of return
|
Total Cash Paid for the Lease of the Cars =
|
-$868,104 |
|
Opportunity Cost =
|
$1,637,407 |
|
Total Cost =
|
-$2,505,511 |
Bank Loan
- 8% Interest Rate
- Finance $40,000 each time
- 48 month loan
- $1007.00 monthly payment
- 5% rate of return
|
Total Cash Paid for the Lease of the Cars =
|
-$531,388 |
|
Opportunity Cost =
|
$1,385,234 |
|
Total Cost =
|
-$1,916,622 |
Pay Cash
- $40,000 per car
- 35% residual value
- 5% rate of return
|
Total Cash Paid for the Lease of the Cars =
|
-$440,000 |
|
Opportunity Cost =
|
$1,264,965 |
|
Total Cost =
|
-$1,704,965 |
The Infinite Banking Concept
- $40000 Car
- Value of Policy $1,916,622
- $1007 monthly premium
- 5% rate of return
|
Total Paid=
|
$531,388Same as would be financed through a bank. Only you paid this to your own policy, so it is a positive number. |
|
Opportunity Cost =
|
$0.00 |
|
Total RECAPTURED FUNDS=
|
$1,916,622 |
To begin you must understand the meaning of opportunity cost: the cost of passing up the next best choice when making a decision. For example, if an asset such as capital is used for one purpose, the opportunity cost is the value of the next best purpose the asset could have been used.
Opportunity cost is an important part of the decision-making process and will be our basis for comparison.
