Big loan worth it?

Author Message
BobbyVang
  • Total Posts : 62
  • Reward points : 0
  • Joined: 4/4/2013
  • Location: Fresno, CA
Big loan worth it? - Fri, 06/7/13 12:11 AM
0
[Helpful answer received] / [List Solutions Only]
Do you think it's worth getting a 2500$ loan for a Hotdog cart in a city of 510,000 population? It'll be a 9.50% rate of charge per year. Main population I believe is Mexicans and Asians. 

Foodbme
  • Total Posts : 9544
  • Reward points : 0
  • Joined: 9/1/2006
  • Location: Gilbert, AZ
Re:Big loan worth it? - Fri, 06/7/13 1:57 AM
0
[This post was marked as helpful]
BobbyVang

Do you think it's worth getting a 2500$ loan for a Hotdog cart in a city of 510,000 population? It'll be a 9.50% rate of charge per year. Main population I believe is Mexicans and Asians. 

The REAL cost of that loan:
Let's assume you are required to pay it off in a year.
Let's assume it's simple interest, (Which it won't be)
The total cost of your loan would be $2738.
Your monthly payment would be $228.
Let's assume you make a NET PROFIT of a $1 a dog, after ALL your expenses,like food cost, insurance, propane, paper products etc., (but BEFORE you make the loan payment)
It will take the sale of the first 228 hot dogs just to pay for the loan before you put any money in your pocket.
If you sell 30 dogs a day, it will take 7.6 days to pay for the cart loan each month. 
60 dogs a day, 3.8 days
100 dogs a day, 2.3 days
Now, YOU decide if it's worth it.
<message edited by Foodbme on Fri, 06/7/13 2:10 AM>

BobbyVang
  • Total Posts : 62
  • Reward points : 0
  • Joined: 4/4/2013
  • Location: Fresno, CA
Re:Big loan worth it? - Fri, 06/7/13 2:17 AM
0
Hmm thanks for the math. I think I'll just build one then for about 700$ then haha. Thanks for the very detailed post.