Bankers Math – Bank Like a Bank Instead of Like a Consumer

Is 4% really 4%? Not according to bankers math.

Scenario One.

Purchase a car for $15,000 4% interest rate Monthly payment $338.69 Term is 48 months or 4 years.

Check for yourself  at Bankrate.com

Let’s look at the amortization schedule of this loan.

Amortization table for $15,000.00 borrowed on Oct 03, 2010

Month / Year Payment Principal Paid Interest Paid Total Interest Balance
Nov. 2010 $338.69 $288.69 $50.00 $50.00 $14,711.31
Dec. 2010 $338.69 $289.65 $49.04 $99.04 $14,421.67
Jan. 2011 $338.69 $290.61 $48.07 $147.11 $14,131.05
Feb. 2011 $338.69 $291.58 $47.10 $194.21 $13,839.47
Mar. 2011 $338.69 $292.55 $46.13 $240.35 $13,546.92
April 2011 $338.69 $293.53 $45.16 $285.50 $13,253.39
May 2011 $338.69 $294.51 $44.18 $329.68 $12,958.88
June 2011 $338.69 $295.49 $43.20 $372.88 $12,663.39
July 2011 $338.69 $296.47 $42.21 $415.09 $12,366.91
Aug. 2011 $338.69 $297.46 $41.22 $456.31 $12,069.45
Sept. 2011 $338.69 $298.45 $40.23 $496.54 $11,771.00
Oct. 2011 $338.69 $299.45 $39.24 $535.78 $11,471.55
Nov. 2011 $338.69 $300.45 $38.24 $574.02 $11,171.10
Dec. 2011 $338.69 $301.45 $37.24 $611.25 $10,869.65
Jan. 2012 $338.69 $302.45 $36.23 $647.49 $10,567.20
Feb. 2012 $338.69 $303.46 $35.22 $682.71 $10,263.74
Mar. 2012 $338.69 $304.47 $34.21 $716.92 $9,959.26
April 2012 $338.69 $305.49 $33.20 $750.12 $9,653.78
May 2012 $338.69 $306.51 $32.18 $782.30 $9,347.27
June 2012 $338.69 $307.53 $31.16 $813.46 $9,039.74
July 2012 $338.69 $308.55 $30.13 $843.59 $8,731.19
Aug. 2012 $338.69 $309.58 $29.10 $872.69 $8,421.60
Sept. 2012 $338.69 $310.61 $28.07 $900.77 $8,110.99
Oct. 2012 $338.69 $311.65 $27.04 $927.80 $7,799.34
Nov. 2012 $338.69 $312.69 $26.00 $953.80 $7,486.65
Dec. 2012 $338.69 $313.73 $24.96 $978.75 $7,172.92
Jan. 2013 $338.69 $314.78 $23.91 $1,002.66 $6,858.15
Feb. 2013 $338.69 $315.83 $22.86 $1,025.53 $6,542.32
Mar. 2013 $338.69 $316.88 $21.81 $1,047.33 $6,225.44
April 2013 $338.69 $317.93 $20.75 $1,068.08 $5,907.51
May 2013 $338.69 $318.99 $19.69 $1,087.78 $5,588.52
June 2013 $338.69 $320.06 $18.63 $1,106.40 $5,268.46
July 2013 $338.69 $321.12 $17.56 $1,123.97 $4,947.33
Aug. 2013 $338.69 $322.19 $16.49 $1,140.46 $4,625.14
Sept. 2013 $338.69 $323.27 $15.42 $1,155.87 $4,301.87
Oct. 2013 $338.69 $324.35 $14.34 $1,170.21 $3,977.52
Nov. 2013 $338.69 $325.43 $13.26 $1,183.47 $3,652.10
Dec. 2013 $338.69 $326.51 $12.17 $1,195.65 $3,325.58
Jan. 2014 $338.69 $327.60 $11.09 $1,206.73 $2,997.98
Feb. 2014 $338.69 $328.69 $9.99 $1,216.72 $2,669.29
Mar. 2014 $338.69 $329.79 $8.90 $1,225.62 $2,339.50
April 2014 $338.69 $330.89 $7.80 $1,233.42 $2,008.62
May 2014 $338.69 $331.99 $6.70 $1,240.12 $1,676.63
June 2014 $338.69 $333.10 $5.59 $1,245.70 $1,343.53
July 2014 $338.69 $334.21 $4.48 $1,250.18 $1,009.32
Aug. 2014 $338.69 $335.32 $3.36 $1,253.55 $674.00
Sept. 2014 $338.69 $336.44 $2.25 $1,255.79 $337.56
Oct. 2014 $338.69 $337.56 $1.13 $1,256.92 $0.00

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If we look at month one’s payment we see that the front loaded interest charge is $50 / $338.69 = 14.76%

If we look at say the 36 month period, we have $1170.21 divided by the $15,000, minus what is left to pay which in this case is 11,022.48, and we have 10.6%

Now let us look at how much interest we paid over the 48 months. Isn’t it $1,256.92?

Now if you divide $1,256.92 by the $15,000 you get 8.3% over the 48 month period. But how many people do you know that buy another car before the first one has finished being paid off? There is no 4% interest rate any where to be found.

This is how banks make their money. They are more concerned with volumizing their money than anything else.  It is the volume of interest they are being paid that is what they like to see.

Now on top of that, they also velocitize the money received from our payments. What does that mean? That means, as soon as they receive your payment they lend it out to the next Joe Blow from Cocoamo.

So while they are earning $14.76% on your first months car payment, as soon as they receive that they lend it to the next car purchaser who they also earn 14.75% on in your month two. And so it goes on and on and on every day over and over again.

Where can you invest, with no risk and earn a guaranteed 8.3% or a 10.6% or even 14.76% which you can also recapture and velocitize so you earn even more than that over time?

Now I ask you, why on earth wouldn’t you want to do the same thing as the banks do with your money, but in your own private banking system? I mean, come on now. Call me right now so I can show more about how banks work and how you can begin to bank like a bank instead of like a consumer.

Or if you are not yet convinced… Wait till you check out the amortization schedule of a mortgage. Now you are looking at percentages in the 80’s and above. Wouldn’t you like to recapture, reuse and recycle your money the way the banks already are. You might be saying ‘but I pay with cash. I never finance anything’. Really?

Well even so; point #1. The banks are also recapturing principal not just the interest. Wouldn’t you like to recapture your principal cash?

point #2. If you hadn’t spent that cash, how much could you have been earning in interest payments? 2%? 3%? 4%? and for how long could you have been earning that interest if you hadn’t spent that money?

point #3. Where did the cash come from? Did you save it up over a period of time? Weren’t you then making payments to yourself before you paid for the car?

point #4.  Now that you have spent the cash, how are you going to pay for the next car? Aren’t you going to have to continue making payments to some place till you have enough to pay for the next one?

point #5. Money has to reside somewhere. Wouldn’t you like your money to reside in a financial vehicle that offers over 30 benefits? One benefit is that it can behave like your own banking system. For instance, banks don’t lend their own money, they lend their depositors money to the borrowers.

Wouldn’t you like the opportunity to borrow from a general pool of money that has your cash value as collateral where your money is able to continue to grow, safely, securely and guaranteed while at the same time you are borrowing from elsewhere.

However, you are the depositor, you are the borrower and you are a part owner of the financial institution that lends from the pool. So you earn interest on your savings, you recapture the principal you are borrowing, you earn the interest you pay yourself for borrowing the money, you earn the dividends of your company’s profits and it all happens in a tax advantaged way.

Please tell me where you can do better than that? I’ll bet you $100.00 in your name to your favorite charity  that after reading Becoming Your Own Banker by best selling author Nelson Nash and having at least one webinar meeting with me, you cannot.

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October 4, 2010 · Jennifer · One Comment
Tags: , , , ,  · Posted in: Bank Like A Bank, Bank strategies for Fastest Debt Elimination, BANKING with INSURANCE, DEBT ELIMINATION, RATE of RETURN

One Response

  1. Jon - December 23, 2015

    . In order to hold the highest offcie in the land (Presidency), you must be a Natural Born American. He is an American, and I could question that, but he is not a Natural Born American. In order for him to be that, BOTH HIS PARENTS AT THE TIME OF HIS BIRTH WOULD HAVE NEEDED TO BE BOTH AMERICAN CITIZENS, and they were not. Is our Constitution wrong? or are we just not paying attention to it any longer?He could even because his father was African, he maybe could have dual-citizenship.But no matter what, no matter how you look at it, he is not a Natural Born American.

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