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      01-21-2020, 11:39 AM   #33
Joekerr
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Drives: 2017 Audi S6
Join Date: Jan 2008
Location: Toronto, ON

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Quote:
Originally Posted by DriverDaily View Post
What's the purpose of using the funds when the cost of a loan is so low?

The interest is $3,124.86 on a $40,000 5 year loan. You setup an auto withdrawal on $719 per month to make the payment and in 5 years of a 6.5% return your car is paid off and you have an extra $4,223 in your account.

That's before you even calculate the taxes, which will always be higher when you take a lump sum like that instead of $719 a month.
Did you account for the taxes he will pay on the additional $719 per month he'll have to make in order to make the payment when calculating this $4K leftover?

What about the taxes he'll pay on the *estimated* 6.5% interest he makes - that baked in to the extra $4K leftover?

Yes the taxes are higher in lump sum, but you can trigger them in a year where your income is lower if he has a corp to have a net wash.
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