Does it make sense to borrow $4k from my HELOC at 4.76% in order to finance 10 MSD to save .00070 on Mercedes lease?
I think not, particularly as the HELOC rate will increase over the next 3 years. Mercedes money factor of .00121 is equivalent of 2.9% fixed rate.
Oops I see my calculation is off.
Using 10 MSD will lower my payment by $51/mo x 36 mo. = $1836
$4000 @4.76% x 3 years = $571
I get it now!
Don’t lease the Mercedes if you need HELOC for 4k in MSDs. Just a thought…
Ha ha ha! I know where you are coming from. But consider maybe I save $2500 per year ($200 per month) leasing a cheaper car. Does that make a dent in my overall financial picture and retirement plan? Nope. My options are up almost $200k this month.
Sound advice though as there are a lot of people driving expensive cars who don’t own houses, 401ks, 529 plans, etc.
Need some financial advice?
at those returns you would hardly need to borrow from a HELOC.
In any case, I would personally do it if it saved me approx $1300 over the course of the lease.
And don’t forget, interest on the HEloc is Fed tax deductible if you itemize. hence the $571 spent on the Heloc interest is actually 30% lower …
I was under the impression interest from a HELOC is only tax deductible if you use the money for anything related to the secured property.
If you use it on other things (expenses, college tuition, buying another property, etc. ), my understanding was you could not deduct it.
Is that not right?
The limit is 100k. It can be used on anything including vacations 
Home equity debt: This category includes mortgages taken out after Oct. 13, 1987, that were not used to buy, build or improve your home. But these mortgages qualify only if throughout the year they totaled $100,000 or less ($50,000 or less if married filing separately).
Read more: http://www.bankrate.com/finance/home-equity/home-equity-line-of-credit-tax-deductible.aspx#ixzz4tbzLaRju
Follow us: @Bankrate on Twitter | Bankrate on Facebook