I am considering making a purchase where I can either pay for a product in full or I can choose to take advantage of their payment plan.

Here are the numbers:

Actual purchase price - $20,590

Payment Plan:

$663/month

36 month term

Nitty Gritty Payment Terms:

- First 2 months due upon signing.

- Payments are billed 2 months at a time and are due upon receipt.

- They refer to payments as monthly payments, but it doesn't sound like it - it sounds like bi-monthly payments.

SO, I want to determine the interest rate I'd be paying with their payment plan. My caculations would suggest that the monthly rate with bi-monthly payments is 1.60% or 21.04% annually [Excel: =RATE(18,1326,-20590). If the payments were truly spread out over 36 months the monthly rate would be .82% or 10.31% annually. [Excel: =RATE(36,1326,-20590).

First question - am I doing this right?

Second question - If not, what is the correct way to determine the interest rate of this payment plan.

I have access to a business credit line that is currently at 5.45% - so the goal here is to make the best financial decision.

Would love to get some feedback here. Thanks!!