If I Loaned You $250,000?

[good sam]

Option two. Even on minimum interest I'll still make a profit.

This assumes that he's not using the money for something else.

[Ephraimh]

Everyone would choose option 2? Where would you get the $189,000 lump sum from?

1. Inflation turns that 189k lump sum into an approximate 100k lump sum when the bill is due.

2. For a non-investor Inflation works in your favor when you pay $9600/year for 25 years instead of $52k/year for 5 years.

2b. $48k first 5 years means you start year #6 with $200k+ you can invest to fight inflation

[sillypainter]

If I loaned you $250,000 today and gave you two repayment options:

1. 60 monthly payments of $4,375.
2. 300 monthly payments of $800 followed by a single payment of $189,000.

Which would you choose?  Why?

Option 2 is paying back double. Not even sure why this is even a question? Does it have to do with the UPS method?

[good sam]

Option 2 is paying back double. Not even sure why this is even a question? Does it have to do with the UPS method?

I assume you took out a 5 year mortgage on your home rather than a 30 year, right?

[skyguy918]

This assumes that he's not using the money for something else.

I assume you took out a 5 year mortgage on your home rather than a 30 year, right?

To take this a step further, the question is lacking information. If I'm making a decision as the borrower, my motivations for borrowing are potentially more important than the math.

[Ephraimh]

To take this a step further, the question is lacking information. If I'm making a decision as the borrower, my motivations for borrowing are potentially more important than the math.

+1!