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How Much We Saved on a 5 Year, 0% Interest Auto Loan

5 years ago, we bought a brand new Toyota Camry after our 2005 Corolla was totaled. The price of the car was $22,600, but with a 5 year, 0% interest rate, I estimated that we’d earn $4,777 by investing that money in the stock market, which brought the total price of the car down to $17,823.

Now that we’re 5 years later and I just made the final payment, I get to look back and see how accurate my estimate was!

Calculating How Much We Saved By Investing

The first payment was on January 27th, 2014, and the final payment was on December 27th, 2018. During that time, the S&P 500 (where I invested that $22,600) gained an average of 7.06% per year, so my estimate was nearly perfect, which is a happy coincidence.

According to the investment and regular withdrawal calculator (which assumes we invested the $22,600, then withdrew $376 each month to cover the payment), we’ve actually earned $4,825 compared to paying for the car in cash.

What I’m really excited about now is the $376 we won’t be paying to Toyota each month!

And we now have a fully paid off 2014 Toyota Camry and a fully paid off 2015 Hyundai Tucson, each with less than 40,000 miles on them, so we should be able to keep these cars for another several years!

We do have a few scrapes and scratches that we’ve acquired over the years that we’ll get fixed, that will likely cost around the same as one month’s payment. After that, the savings will get invested each month and continue to grow.

Taking the 0% Interest Was Worth It For Us, But It’s Not For Everyone

Since we were prepared to pay for the car in cash, we really were in the position to make this decision.

If you are thinking about buying a new car and are faced with a similar decision, but you AREN’T paying in cash, you can’t simply say to yourself that you’re saving money with 0% interest since that money isn’t being invested in your case! Yes, it’s cheaper than a 3% auto loan, but you’d still be paying the full cost of the car!

Our decision paid off, and hopefully we’ll have the car for another 5+ years, which gives us plenty of time for us to save up for the next time we’ll need to make a car buying decision.


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