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This means that wealthy Americans will need to think more critically about how they fund large purchases.
When Should Wealthy Individuals Pay For a Large Purchase in Cash?
There are pros and cons of paying for a large purchase with cash that should be considered.
Paying cash eliminates the interest expense associated with financing, Thompson said.
In addition, paying with cash also may come with negotiating power.
However, paying in cash reduces liquid assets, which is not always a smart move.
When Should Wealthy Individuals Finance Their Large Purchases?
Financing allows wealthy individuals to preserve their liquid assets for other investments or opportunities, Thompson said.
Financing may become a particularly appealing option amid price increases due to tariffs.
Financing may also offertax benefits.
Financing major purchases can offer consumers the potential to deduct the interest paid on the loan, Thompson said.
Home mortgages, investment interest expenses or business loan interest can fall into this category.
Its critical that consumers are making informed decisions and working with a professional to ensure theyre maximizing their deductions.
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