Financing Your Own Car
Five methods of auto financing compared side by side — and why financing through your policy wins dramatically over time.
From Becoming Your Own Banker, Chapter 13
In one of the most detailed examples in BYOB, Nash compares five methods of purchasing a car over a lifetime. Method A is leasing — the most expensive, you never build equity. Method B is a conventional bank loan — better, but you're paying interest to the bank. Method C is paying cash from a sinking fund — no interest paid, but you lose the growth on the money spent.
Method D introduces self-banking using a CD. You save, "borrow" from yourself, and repay with interest. Better — you're capturing interest payments. But the returns are modest and the earnings benefit the bank's stockholders.
Method E uses dividend-paying whole life. You fund your policy, borrow against cash value, and repay at the same rate you'd repay a bank. Your cash value continues earning guaranteed interest and dividends while the loan is outstanding. There are no stockholders — in a mutual company, you are the owner.
Nash's analysis shows Method E overtakes Method D around year 14, and the gap widens every year after. By retirement, the CD depletes in roughly 5.7 years at $50,000/year withdrawals. The whole life approach continues growing and generating income indefinitely — while also maintaining a death benefit for the next generation.