Last updated: • Not financial advice
Key Tradeoffs
- Cost of capital: Compare loan APR to your after‑tax investment return.
- Flexibility: Liquidity value vs ongoing debt service.
- Risk: Rate, refinancing, and market value risk vs cash concentration risk.
Modeling Steps
- Run loan scenarios in the calculator (fixed/variable, cadence, balloon).
- Estimate LOC costs with likely index + margin and utilization.
- Compare to cash: lost investment return (after tax) vs interest expenses (after tax).
When Each Path Fits
- Cash: Abundant liquidity, high confidence in future cash needs; simple and fast.
- Loan: Prefer fixed payments; preserve liquidity for operations or investments.
- LOC: Short‑term bridge with planned payoff; variable‑rate risk management needed.
Related Reading
See fixed vs variable, refinancing, and payment frequency. External references: FRED · CFPB · NBAA.