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Paying for a 451

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Someone told me recently that they plan to obtain a Line of Credit off their home equity to purchase their car. A few benefits I can see from taking this route to purchase my 451 are (1) Setting a resonable repayment time line, (2) No disadvantages of paying it off sooner and (3) The interest is tax deductible. I think I may check this out. I don't want to Lease because I plan to do some mods and I really want a monthly payment around $250 without having to give a down payment. I can well afford a hefty car payment but I want to take the difference I will be saving and invest it in my 401K.Has anyone in the US done this or are you considering it. Let me know your thoughts.Regina

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Just a couple of comments. What ever you do find the lowest interest rate you can. For example when I bought my last car, there were three choices; pay cash, taking from my investments which were making well over 15% annually. Using my home owners line of credit which is now around 6 or 7%, or financing a 2.9 through the dealer. The math says I was way ahead by financing through the dealer even though I could have lowered the effective interest rate by a tax deduction. Also because it is a depreciable asset it is usually best to buy rather than lease.FWIW In light of my comments, In the past I have paid cash for my cars and I normally keep them over 10 years, and that makes a big difference in my thought process. I will be selling a 15 year old Grand Cherokee when I buy the smart.Hope this helps.Don

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I ran a quick computation. Buying a $16000 car with home line of credit at 6% for 60 months as a total cost of about $200 more than a loan for $16000 for 60 months at 5%. Other factors that you might have will change these figuresDon

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Don't you guys south of the border have some kind of deal where interest can be a tax deduction? Is that any loan interest, or only on mortages?MG

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I will be writing a check. I pay myself every month and have a car account. That account earns interest over the years and then when it's time for a new car I write a check. Only way it makes any sense at all to me to buy a car.

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Don't you guys south of the border have some kind of deal where interest can be a tax deduction? Is that any loan interest, or only on mortages?MG

Only interest on Mortgage loans id deductible. Interest on a home equity line of credit may be deductable.Don

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or interest on money borrowed to run a business........business cars, equipment .....

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Home equity debt interest is deductible, but under certain limitations. If it was not used to purchase the property or make improvements on it, there is a limit of $100,000, so don't go to crazy on the mods ;)Another limitation is that the allowable home equity debt (non-acquisition) cannot exceed the difference between the home's current market value and the amount of acquisition debt outstanding on the property.(It has been almost 20 years since I've done US tax, so please confirm the above is correct before relying on it).

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I would be pretty cautious about borrowing against my home to buy a car.If circumstances change and you cannot make the payments for whatever reason, do you want someone to repossess your car, or foreclose on your house? It is not something anyone likes to think about, but most Americans have very little savings, and only have the cash to cover one or two months of their expenses. All it takes is a layoff or someone to get ill and circumstances can change very quickly. Sorry to be a part pooper, but think through the potential consequences before you put your home on the line.

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Danno wrote, "Another limitation is that the allowable home equity debt (non-acquisition) cannot exceed the difference between the home's current market value and the amount of acquisition debt outstanding on the property."Danno, Can I get that in English? Thanks, Regina

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Garp,Your response seemed like a slam against Americans. I know this is a Canadian site but when is the USA bashing going to stop around here? Just saying this will cause some kind of stir and I apologize for jumping on your response. In general, I think CsC is the best site I have been on but I just don't understand the USA bashing that creeps in quite regularly on the forums.I know that most of the Canadian members on this site would blast me out of the water (and rightly so) if I said, "It is not something anyone likes to think about, but most Canadians have very little savings, and only have the cash to cover one or two months of their expenses." So why can't we all be more considerate of race relations especially since this site will endoubtably attract more Americans with the launch of the smart car next year?I'm not a US flag carrying card member (although I brought a flag to the Niagara Falls Winery Tour as a joke), I thought this forum was a place to "Open your Mind" about the smart car and to share ideas that can make this car experience unique. Did I miss read the CsC motto? I'm pretty sure it said, "For everyone who loves smart cars". It doesn't say, "For everyone who loves smart cars and who hate or despise America."OK...I'm off my soap box. Let'er rip with your responses. Just remember, I like to think that CsC is a fun loving smart car fan site that embraces everyone no matter where they come from in the world. It's not about political and/or regional bashing. It's about the car and how much we love it!Thanks,Regina:)

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Garp,Your response seemed like a slam against Americans. I know this is a Canadian site but when is the USA bashing going to stop around here? Just saying this will cause some kind of stir and I apologize for jumping on your response. In general, I think CsC is the best site I have been on but I just don't understand the USA bashing that creeps in quite regularly on the forums.I know that most of the Canadian members on this site would blast me out of the water (and rightly so) if I said, "It is not something anyone likes to think about, but most Canadians have very little savings, and only have the cash to cover one or two months of their expenses." So why can't we all be more considerate of race relations especially since this site will endoubtably attract more Americans with the launch of the smart car next year?I'm not a US flag carrying card member (although I brought a flag to the Niagara Falls Winery Tour as a joke), I thought this forum was a place to "Open your Mind" about the smart car and to share ideas that can make this car experience unique. Did I miss read the CsC motto? I'm pretty sure it said, "For everyone who loves smart cars". It doesn't say, "For everyone who loves smart cars and who hate or despise America."OK...I'm off my soap box. Let'er rip with your responses. Just remember, I like to think that CsC is a fun loving smart car fan site that embraces everyone no matter where they come from in the world. It's not about political and/or regional bashing. It's about the car and how much we love it!Thanks,Regina:)

Sorry if you read that as a slam, it wasn't intended as that, just as a caution. By the way, I am American.

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I would be pretty cautious about borrowing against my home to buy a car.If circumstances change and you cannot make the payments for whatever reason, do you want someone to repossess your car, or foreclose on your house? It is not something anyone likes to think about, but most Americans have very little savings, and only have the cash to cover one or two months of their expenses. All it takes is a layoff or someone to get ill and circumstances can change very quickly. Sorry to be a part pooper, but think through the potential consequences before you put your home on the line.

As an US citizen, I take no offense at your comments. My personal experience over the last 40 or so years, and what is reported on financial news seems to back up what you have stated. The truth may seem negative, but as I see it the truth is the truth. We US Americans, it seems to me, really don't have a grasp on the concept of how much the world is affected by what we do. As we seem to be in a world economy whether or not we like it or not, we need to consider that in our national and international actions.Also, it is easier for one to criticize ones own "spouse" than to listen to another do the same thing.Climbing slowly down from my soap box, I will now retreat to my corner to wait for my German/French/Japanese/Canadian (thanks Magna) car to arrive in the USADon

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Garp - your response was well received. By the way, I love the fact that this is a Canadian site, with international members and a French/German/Asian/Canadian car. I say Asian because of the Mitsubishi engine. Where exactly is that built in Asia?Thanks everyone!!

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I think Regina has been given many insightful thoughts on how to or not to finance her wheels. Garp is right about us (Yanks) in that we as a nation now have one of the lowest savings rates of industrialized nations. Hell it may even be a negative number. Garp is looking out for you - all of us.

Just got a phone invite from the MB dealer here in Chas. to be there on Thursday 9/27 for the reservation holders. The tour dates here are 9/28 thru 10/03.

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Funny, I haven't purchased a car in 12 years because leases have been my preferred option. However, now that I am considering a purchase, I will check out the lowest interest rate when the time comes and compare it against the home equity line of credit idea. Thankfully, I can afford a luxury vehicle as well as my house note.Thanks everybody for your comments. Moderator, please lock this thread.Regina

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I agree with Regina.Anti US shots appear often on this board. yet I have never seen an anti Canadian post.I understand the fact that most people hate Bush and the War, as do most of us "down here".But now you guys have have your very own right wing, war loving leader: Harper. Let's get along beter here, and Mods can do their part by not letting Anti US posts go through.My Mother came over from England and worked as a nurse in Toronto for years, than came over here. I married a Canadian from London Ont. We visit Canada a lot.We are not who you think we are.A2jack

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I don't know why this has deteriorated into a Canadian VS the US thread I made one innocent comment, as an American, that Americans tend not to save much money, but people seem to be incredibly sensitive to the issue. Hopefully it will be allowed to drop.I like the fact that this is a Canadian site, and I would hate to see it loose it's Canadian identity. If a few jabs against Americans come with that, then so be it. We Americans have pretty thick skin, we have to these days, and I will take a few jabs over some homogenized soulless board any time.

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It has not deteriorated to that..its experiencing growth and change...Being from the USA and enjoying the 450 for over a year, I love this site. I joined it because it said for those that love the Smart Car. What I didn't realize is just how deep this site would effect my life! The car and this site has opened me to a new understanding of Canada...before I had never been....last year I drove the Smart up to Niagra with the intent of meeting Canadians.....and met some great people. Since then have had them stay in my home in Virginia on several occasions...went back this year to the Niagra wine cruise, so for me I have adopted Ontario as a second home area. These great friendships and knowlege of the Smart I owe to this site. My personal opinion is it would be sad if the USA Smarties do not adopt this site as THE site.... because of the history of Smart in NA, the wealth of knowlege that is here, and because of my own enrichment I have experienced with the integration I have enjoyed, I can appreciate what they would lose out on. I am all for giving credit where it is due, to Candaians for creating this wonderful tool of knowlege sharing and commradrie. I would like to see more integration as a result of the Smart car..not more segregation.

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Garp.This was an outpouring of pent-up anger and you just happenrd to trip it. CsC is on a drive to build up US membership, and IMO, anti US shots will not help.We are from the Eastern Time Zone (HA, HA, another discussion on the USA forum).What area are you Smarting from?Best Regards.A2jack.

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If we all want to learn more about each other I recommend that you go see Michael Moore's movie ''Sicko''.I learned a lot about the American health system and I'm sure you can learn about the Canadian heath care system.However I am now more envious of the French health care system :biglaugh: If you go with an open mind you are bound to learn something.

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Smart 142.Haven't seen the movie yet, but for the record I love CsC. This is a great thread, and I for one, would hate to see it dumped, but I know it must be moved off the 451 forum.Can you move it to another spot? IMO there will be lots of interest from others.A2jack

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