Karou is considering different options for financing the $12,000 balance on her planned new car purchase. The cheapest advertised rate among the local banks is 7 percent for a 48-month car loan. The current rate on her revolving home equity line is 8.5 percent. Karou is in the 25 per-cent federal tax bracket and the 5.75 percent state tax bracket.
Use the online Loan and Credit Line Tax Savings Calculator to determine her income tax savings over the life of the loan if she chooses to use her home equity line of credit.