Borrow v Use Savings

[LOD]

Would anyone be able to advise whether it would be more economical to borrow €12,000 at 4.95% for four years to purchase a jeep for farming or to spend our own money on which we are getting a 3% return at the moment, bearing in mind that because the jeep is for commercial use we can claim tax back on the interest at 20%?

 

[GeneralZod]

20% tax back brings 4.95% down to an affective rate of 3.96% (= 4.95% x 0.8).

So based on a simple 3% versus 3.96% comparison it is cheaper to spend the savings on it than take out a loan.

However you could get better than 3.96% on deposit after DIRT is deducted. e.g. With RaboDirect or First Active.
The 4.95% loan rate is extremely low, who's offering it, is it a mortgage?

 

[LOD]

Thanks for that, it can be hard to know which to do. The 4.95% rate is from the Garda Credit Union, they have very competitive rates for borrowing. The savings rates are not as good.