Sharif Is Planning to Buy a New Car for Personal

question 48

Essay

Sharif is planning to buy a new car for personal use and will need to take out a loan.His sources of the financing include (1)a loan from the car dealership charging 6% interest, (2)a loan from his brokerage firm secured against his stock portfolio charging 6.2% and (3)a home equity bank loan secured against his home charging 7%.Sharif has AGI of $150,000 and does itemize his deductions.He is in the 28% tax bracket.Discuss how income taxes can influence his decision regarding the source of financing.

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