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millerja9 · Joined: 19 Jun 2009 Posts: 100 0.00 Dollars($)

I have excellent credit. I own a home with a lot of equity and have a home equity available with a good rate. Is it better to take out an auto loan or to put the debt on the home equity?

savior70 · Posted: Wed Oct 07, 2009 4:43 am Post subject:

Hi millerja,

A home equity loan can be a good alternative option for an auto loan. Home equity loans usually have a lower interest rates and the interest paid on such loans is often tax deductible. These two advantages make equity loans an attractive option as compared to auto loans. That's why if you have a lot of equity in your home, it'd be a good idea to go for an home equity loan to purchase a car.

dollylee9 · Joined: 19 Jul 2009 Posts: 63 -0.14 Dollars($)

Advantages and disadvantages of Home equity loan over Conventional auto financing:

Advantages-

1) Interest on home equity loan may be tax-deductible. First check with your tax adviser about the qualifying for loan.

2) You can get some concession payment as you are with sanctioned home equity loan for car puchase. As dealer is getting full price he will definately offer some benefit to you. Some concession may offer by leader to you. But you have to approval with you of home equity loan. As effect of full payment dealer may allow you for some other benefits.

3) Auto dealers have more interest rate than home equity loan. This will impact on your finace. Even small amout of dropping in interest rate through home equity loan will results in big monitory gain by saving your money.

Disadvantages-

1) If you fail to make your car loan payments, the vehicle may get repossessed. As you are taking home equity loan in line. The result of which may be very serious as you may have to sell your house.

2) As rate increases in home equity loan it is very difficult to pay loan with several years. Its major disvantage as home equity loan rates are variable. A home equity line of credit is often a good option to finance a car because it usually carries lower closing costs than a home equity loan.

3) Processing a home equity loan may involve higher upfront fees than taking out a car loan.

4)In adding a second mortgage may require you to purchase private mortgage insurance (PMI).

sunnyca2009 · Joined: 04 Aug 2009 Posts: 1731 35.55 Dollars($)

millerja

That woudl depnd on what interest youa r epaying for the debt you have today. if you are ayign high interest then take a home equity loan, if the rates are lower than what you payign today and pay off the debt

If you are plannign to buy car, probably dealers are offering better interest rates, so may eb you are better off taking the loan from them, insted of tapping in to equity

One advantage with equity laon would be, you can deduct the interest you paid

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Advice on Car Purchase with a Home Equity Loan