Math Genuises HELP!?

Question

my wife needs a root canal. Our insurance doesn't cover it. We have two options.
1. Put it on the dentist's credit plan. $2000, no interest for 18 months.
2. Put it on our credit card. 13% APR and pay $1500. i need help figuring which would save us more money.
We'll probably pay about $150 /month which ever option we choose. Please help me figure this out. Her appointment if on Monday the 12th. Thanks.

Answer 1

I wanted to give you as quick an answer that is correct as possible, so you can make a decision.

Plan 2 is best if you can pay $150 per month.

Under Plan 1, at $150 per month you would pay the $2000 off in 13-14 months, so there would be no "interest" per se. Nevertheless, you would spend $2000.

Under plan 2, You would average 13% APR on an average balance of $750, and you would have the $1500 paid off in 10 months (neglecting interest for the moment) The interest would only amount to the average balance $750, times 13% times 10/12 of a year. That's only $81.25 in interest, for a quick, back of the envelope calculation.

So under $1600 with plan 2, $2000 with Plan 1.

Hope that helps, and is in time! :-)

Answer 2

The other answers give you the correct choice, but the wrong method. It sounds as though the dentist's credit plan lets you pay a $2000 lump sum in 18 months time. So you could open a savings account, pay in $150 per month for 10 months, then another $90 or so to equate to what the credit card interest would have been, then what would you have with accumulated savings interest after 18 months? I can't quite make it $1800, so the credit card route is still best - just not by as big a margin as everybody else says.

Answer 3

I know everyones saying to put it on the credit card, but whats up with the $500 difference between the two options? If the dentist is going to charge you MORE for using HIS plan, then this is in fact a cost of doing the financing.

Why not yell at him for "claiming" a no interest deal, when it will in fact cost you $500? I'll bet you $1 that he is farming out the loan to someone like care credit. Get him to take it off and pay 1500 with really no interest for 18 months. Pay it off in 10.

Be FIRM. They will take it off. (Be willing to walk if they dont)

Answer 4

It's cheaper to go with the credit card.

Your 13% APR is between 1% and 1.1% per month. That's between $15 and $16.50 at first, but shrinks as you pay down the balance (plus, credit cards usually give a 30-day grace period).

I estimate your total payments at $1574 if you use the credit card and pay $150 per month. This is quite a bit cheaper than $2000 interest-free.

Answer 5

The math is easy.
2000 and you pay 150 for 13.3 months
or 1500 and you pay 150 for 11 months.

The interest on the 1500 is less than 190.

So with the credit card, you save more than $300

I think you need to check out other dentists.
I have never paid more than $800 for a root canal.

Answer 6

I say you take option 2. If you plan to pay $150 dollars a month it will take you 10 months to pay off 1500, and you will only accumulate about $80 finance charge if you pay it in 10 months. Hope it helps!

Answer 7

by putting it on your C.C you will all ready be saving $500, as well as knowing the monthly payments are due each month at the same time and also establishing good credit, Thru your Denist plan you mite be able to postpone your intrest, however he is already charging you $500 more and that is only intrest free for 18 monuths, and how much is his intrest rate at that point.? ,,, IF you use your credit card, the one with the lowest intrest rate and pay it off as soon as you can , this mite also save you some $$$, and the overall cost should run about $1700 ______ good luck