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You are preparing to buy a car that costs $ 36 , 000 . You can pay for the car using an auto loan from

You are preparing to buy a car that costs$36,000.

You can pay for the car using an auto loan from the car manufacturer or using money from your home equity line of credit (HELOC). The auto loan charges2.75%interest per annum. The HELOC charges3.85%interest per annum but the interest is tax deductible. If your current tax rate is32%, which source of funds should you use?

HELOC

Auto Loan

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