{
  "slug": "cash-vs-financed-purchase-cost",
  "title": "Cash vs Financed Purchase Cost Calculator",
  "heading": "Cash vs Financed Purchase Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/cash-vs-financed-purchase-cost",
  "summary": "Compare paying cash outright against financing and investing the difference.",
  "description": "Paying cash avoids interest entirely but ties up capital that could otherwise be invested, while financing spreads payments out and keeps your cash working elsewhere, at the cost of loan interest. This tool compares the total interest paid on a loan against the potential investment growth of keeping your cash invested instead, so you can see which path leaves you with more net worth.",
  "formula": "Financed Net Cost = Total Interest Paid − Investment Growth on Retained Cash. Cash Net Cost = $0 interest, $0 investment growth on that cash.",
  "dateModified": "2026-09-06",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=cash-vs-financed-purchase-cost",
  "inputs": [
    {
      "id": "purchasePrice",
      "label": "Purchase price",
      "kind": "number",
      "hint": null,
      "default": 25000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "loanRate",
      "label": "Loan APR",
      "kind": "number",
      "hint": null,
      "default": 7,
      "unit": "%",
      "min": 0,
      "max": 25
    },
    {
      "id": "loanTermYears",
      "label": "Loan term (years)",
      "kind": "number",
      "hint": null,
      "default": 5,
      "unit": null,
      "min": 1,
      "max": 10
    },
    {
      "id": "investReturn",
      "label": "Assumed investment return if cash retained",
      "kind": "number",
      "hint": null,
      "default": 7,
      "unit": "%",
      "min": 0,
      "max": 15
    }
  ],
  "outputs": [
    {
      "id": "winner",
      "label": "Better net financial outcome",
      "format": "raw",
      "hint": null,
      "primary": true
    },
    {
      "id": "totalInterest",
      "label": "Total loan interest paid",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "investGrowth",
      "label": "Investment growth on retained cash",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "diff",
      "label": "Net advantage magnitude",
      "format": "currency",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "Purchase price: 25000 $",
      "Loan APR: 7 %",
      "Loan term (years): 5",
      "Assumed investment return if cash retained: 7 %"
    ],
    "outputs": [
      "Better net financial outcome: Finance & Invest the Cash",
      "Total loan interest paid: $4,702",
      "Investment growth on retained cash: $10,064",
      "Net advantage magnitude: $5,362"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter purchase price ($).",
      "Enter loan apr (%).",
      "Enter loan term (years).",
      "Enter assumed investment return if cash retained (%).",
      "Read your better net financial outcome on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "purchasePrice": 15000,
        "loanRate": 4.2,
        "loanTermYears": 3,
        "investReturn": 4.2
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "purchasePrice": 25000,
        "loanRate": 7,
        "loanTermYears": 5,
        "investReturn": 7
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "purchasePrice": 40000,
        "loanRate": 11.200000000000001,
        "loanTermYears": 8,
        "investReturn": 11.200000000000001
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "Isn't paying cash always safer?",
      "a": "It's lower-risk since there's no debt obligation, but 'safer' isn't the same as 'better' financially if your investment return assumption comfortably exceeds your loan rate over the term."
    },
    {
      "q": "Does this apply to mortgages too?",
      "a": "The same logic applies, though mortgage interest may be tax-deductible and home equity isn't as liquid as a brokerage account, both of which shift the math somewhat."
    },
    {
      "q": "What if the market underperforms?",
      "a": "Financing only wins if your actual investment return beats your loan's after-tax rate; a market downturn during your loan term could flip the outcome in favor of having paid cash."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/new-vs-used-car-cost"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — Cash vs Financed Purchase Cost Calculator (https://www.revenuelab.fyi/toolbox/cash-vs-financed-purchase-cost)"
}