Overhaulin'

Is it a good idea to use a home equity loan to pay for a new car?

Instead of taking a car loan, use the equity from my place to it. If I were to get a car, I would get it financed. So to me, it seems smart just to cash some equity out with the added benefit of deducting interest for tax returns.

Public Comments

1. If you have a fairly high equity accrued, a low fixed rate, and do not plan to move any sooner than you can recover the lost equity, it could work fine.
2. Would you KNOWINGLY finance a car for 30 years on an adjustable interest rate? Sounds nutty, doesn't it? That is what you are doing by using a HELOC to buy a car. It's not smart...it's dumb...you'll never recover in the tax benefit over what you'll be spending in interest. HELOC rates are usually between (on average) between 7% and 10% and FLUCTUATE. If you have good credit, you can get a car loan for 5% or less, and with some cars even 0%. All you'll be doing is the FRACTION of tax benefit you'll get on the HELOC you are still paying for on the difference between a low-interest car loan and a high-interest HELOC...so where is your savings? If you took a $30K car loan out on a 7% HELOC over 15 (not even 30) years. That will end up costing you $48, 537 in the end. Do you think you'll get MORE than a $18,537 tax deduction? You can bet your last dollar you won't...not even 25% of that. If you took that same $30K car loan over 5 years at 7%, you'll be paying just over $35K in the end. Again, if you have good credit, you should be able to easily beat 7%. I can't even begin to tell you how much money you are going to be flushing down the toilet.
3. Without getting too complicated, consider this. How long will the loan term be on a financed car? How long will the loan term be for a home equity loan? Home equity loans have a longer term, so in the end you may be paying more interest.
4. Yes because you can write off the interest payment. Also, a good site is... http://www.surveyland.org/jump.php?link=auto See ya.