Niche parking permit discount - LBHF

zsolmanz

LBHF just bumped their permit prices (in apparently the first change since 2012).

However, the £193 (for my car) annual permit can also be split into auto-renewed monthly payments of... £16.08.

The eagle-eyed amongst you will identify that's less than £193 nominal, and a quick 4% NPV  (https://www.calculatorsoup.com/calculators/financial/net-present-value-calculator.php) calculation puts the true annual cost at £166 if paid monthly (i.e. 14% off).

The risk is if they bump prices again soon - but hopefully they give enough warning to buy a year at current prices in that case!

eddddy

I'm not sure what calculation you're doing...

• You have the choice of a single payment of £193 today
• Or 12 monthly payments of £16.08 starting today (12 x £16.08 = £192.96)

So if you had a savings account that paid 4% interest per year, you could pay £3.49 less - if you paid monthly instead of yearly. (Roughly a 1.8% saving).

i.e. You'd only have to put £189.47 into the savings account at the start of the year in order to pay the 12 monthly payments of £16.08



To save 14% (and therefore only pay £166), you'd need a savings account that paid roughly 33% interest per year. And obviously, no savings account would pay that level of interest. 





Edit to add....

This is a bit of a wild guess, but did you specify an interest rate (or discount rate per period) of 4%?

The payment periods are monthly, so that have been treated as an interest rate of 4% per month.

But it should have been 4% per year (not per month).