I'm thinking of buying a car... so, I used bankrate . com to see the best rates right now.. A used car loan is running at 7.44 APR vs a HELOC which runs at 7.84 APR... However, I believe the interest paid on HELOCs are tax deductible... If this is true, then wouldn't it make more sense to use a HELOC to buy a car?
Sounds like a good idea, but dont you use your house as collateral for a HELOC? Im not sure if defaulting on a HELOC would cause you to have to sell your house to pay the loan off out of equity or not.
hmmm good point... with a default car loan, you lose the car... with a default HELOC, you might lose the house... not that I would plan to default or anything, just stating the risks... although you would probably sell the car to pay the loan instead of selling the house to pay the loan... any other risks/insights as to what to consider?
Long Island: The issue is not really the default, but the theory that your equity is your silver bullet. If something happens 2 years from now and you need credit, the equity in your home is usually the easiest to qualify for. It might be harder, if conditions get bad for you financially, to borrow money uncollateralized. I would get a loan for the car, preferably at UFCU (best rates) and then get a HELOC for an emergency. Also, a HELOC is usually a variable interest rate. It will go up, I guarantee you. But in an emergency it is worth it. This is what I do all day. Trust me.
