Barbara is going to purchase a car for $20,000 She has two financing options She can finance the purchase through the dealer at 1 for 48 months, with monthly loan payments of $425, or she can take a $2,000 rebate on the purchase price and finance the remaining $18,000 with a 7 5 home equity loan wh...

If Barbara uses the dealer financing none of the interest sh ...

Barbara is going to purchase a car for $20,000. She has two financing options: She can finance

Question:

Barbara is going to purchase a car for $20,000. She has two financing options: She can finance the purchase through the at 1% for 48 months, with monthly loan payments of $425, or she can take a $2,000 rebate on the purchase price and finance the remaining $18,000 with a 7.5% home equity loan whose monthly payment will be $435. The interest on the home equity loan is deductible; the interest on the loan is not. Barbara is in the 33% marginal tax rate bracket. Determine her best course of action in financing the purchase of the car.

Dealer
A dealer in the securities market is an individual or firm who stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). A dealer seeks to profit from the spread between the...