I also have the same situation/question.
Mine plays out like so:
Loan Conditions:
$69,100 USD
-$400 Up front fee taken from loan
-$2,558 Cost of loan (interest rate 1.44% over 5 years)
-$1,194 Monthly Paycheck Deduct (loan repayment)
Take loan:
Return Earned Taxes Total Gain ROI
0.0% -$2,958 $0 $2,958 -4.13%
Break Even1.42% $2,060 $309 $1,751 2.44%
4% $11,926 $1,789 $10,137 14.15%
8% $29,285 $4,393 $24,892 34.74%
15% $66,522 $9,978 $56,544 78.91%
Don't take loan:
Return Earned Taxes Total Gain ROI
0% $0 $0 $0 0.00%
Break Even1.42% $2,064 $310 $1,754 3.06%
4% $5,965 $895 $5,070 8.85%
8% $12,417 $1,862 $10,554 18.42%
15% $24,965 $3,745 $21,220 37.03%
*calcs assume 5 years (length of loan)
*taxes assume 15%
Return Benefit of Loan
0.0% -4.13% $2,958
1.42% -0.62% $3
4% 5.30% $5,067
8% 16.32% $14,338
15% 41.88% $35,324
My situation puts break even at 1.42%. I think the numbers say to take the loan, but it is still debt which I am against.... Also, is the risk worth coming out ahead only $15k after 5 years (8% annual return)?
I settled on waiting until our house finally sells and then making the decision. That will give me a new set of questions though- where do I invest $350k taxable? Vanguard total stock market?
Not trying to hijack your thread just trying some stimulus.