Guys,
Please help me to understand the following part of this market sizing question:
- Why average financed value is: price of the car divided by 2? The video itself says that you pay more in the beginning to the bank, but pay less in the end. Also, it says nothing about 50% down payment.
This is assuming you start with 100% financing.
Since it is the average you can simplify by being the average between the Initial Period (100% is financed) and the Final Period (0% is financed), after you repaid all capital.
(100% + 0%) / 2 = 50%
If you started with 50% down payment, then the average financed value would be (50% + 0%) / 2 = 25%
Of course, the framework seems to not be acknowledging that in general there will be a downpayment
(edited)
We need a lot more context here….
Alnur, this looks intellectually interesting, but we don't have enough information to help you.
Can you provide the full context and what is specifically that you're struggling with?
Best,
Cristian
