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I would favor the investment side for the reason stated previously. However, here is my twist. My taxable investment account is a margin account. Sometimes I owe money on it and sometimes I have a cash balance depending on interest rates and the market. I make withdrawals from that account to replenish my cash reserves for annual living expenses. I would just withdraw from that account to purchase the car. If that causes you to pay interest in the margin account then the interest is deductable as investment interest. You sell stocks when the time is right to repay the margin.

Some will tell you that the money has to be used for other investments to claim the interest on your taxes but really since I withdraw cash regularly from the account and I am buying and selling stocks several times a year where do I draw the line between using the margin for investments and using it for personal purposes.
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