ZeusC6

I was able to get 3.25 because of my credit AND it has to be paid off in 5 years.
Good way to go because you can deduct the interest, a little risky yes, BUT if you have the equity in the bank, why not?

CHASLS2

That sure is a horse of a different color!

Arthur6

Two years ago I found I CANNOT deduct any home equity interest (per my tax advisor) because I make too much money(?????)
Somewhere round $175,000 annual income I (we) loose any home interest deductions.
I had sold a LOT of rental property that year (Paid about $350,000 Income Tax!!) so I guess I’m subsidizing everyone’s tax deductions…
Last two years I have had ZERO personal exemptions on my income tax forms and don’t expect any in the near future.
Sorry for the rant…
My 2 ¢

chargedsol

I work at a nationwide lender and do HELOC's quite often, you just have to know what you are getting into.

MySea6

can't do in TX in any event. just recently are you able to utilize home equity for offspring education but other than actual home improvement, that's it is my understanding.

Hatchet

Absolutely...treat it the same as any other loan/credit. It's not free money, be disciplined in paying it back!

Times are different now and people have learned other ways to finance the things in life. With the tax deduction, I don't see how people are still opposed to this . What is it, 1950???

It is going to be a debt that has to be repaid in either scenario, traditional car loan or HELOC. The HELOC gives you the tax deduction and an interest only payment. You can decide how much principal you want to repay each month and can do so on a time frame comparable to a 36-48-60 month car loan. More principal this month, less the next, you decide.

I have considerable equity in my home maybe that's why it seems like a no-brainer to me. If you are short on equity, then maybe a traditional car loan is more viable. I don't know what it is, but surely there is a formula to let you know what an "acceptable" amount of equity is and therefore how to use it.

It makes sense to me but to each his own.

ronman99vette

My .02 is that it is a bad idea. How much equity do you have in your home to pull $50k+? The market is correcting and you may not have the equity you think you have. You better have a realtor give you a true estimate of your home, looking at comps. The bank just wants to lend you more money. I've been in my home 3 1/2 years and I've seen several homes sitting much longer in my neighborhood. If I "had" to sell tomorrow due to losing my job, divorce, or disaster, etc... I want all the room I've got to negotiate. If you have 300k in equity and enough cash in the bank to pay the essentials for 6 months go for it. If you have 60k in equity in a cooling housing market I think you are setting yourself up for possible disaster. Good Luck.

C5 then C6

You can do a home equity loan in Texas up to 80% CLTV which means if your house is valued by an appraiser at 200,000 and you currently owe 120,000 you could borrow against your home up to 80% of the value of your home. In this case you could borrow the difference between 80% of the loan to value, 160,000, and the 120,000 you currently owe or 40,000. PM me if you want more details on Texas, there is a harry thing called an A6 loan.

For the rest of the country, most states allow up to 100% of the value to be used for an equity line. Although, given the current credit crunch, most lenders are pulling back from the 100% loans, particulary those without income documentation, commonly referred to as "Liar Loans"

KevinDavid

DON'T DO IT. A home equity loan should be used to improve the value of the home only. Millions of people have massive debt because they took out home equity loans to maintain a lifestyle including buying vehicles they couldn't really afford.

C5 then C6

A home equity loan most certainly makes sense under the following conditions.

You live in an area that is not subject to severe home price volatility (ie, Vegas, Cali, Florida). Could cause you grief if you have an ARM resetting on your first or something along those lines. (ie, if you lose value you could have trouble if you are doing a refi on the first). This could be corrected by taking out a loan on your car if you got in a jam.

You have a large amount of equity in your home. I wouldn't recommend anything over 80% CLTV without careful evaluation.

You have good financial planning. Don't sign up for a HELOC and pay interest forever. If you cannot afford a normal car loan, don't lean on a HELOC for a lower payment. The play would be to get the HELOC, write off the interest, but make a payment that will bring the balance down to ZERO in 5 or 6 years. The truth is that if you get into a financial bind, the HELOC allows you that flexibility to make a lower payment if you suffered a financial loss like a RIF.

Finally, only buy what you can afford. If you need to do fancy financing to buy anything, you can't afford it. In this case the HELOC should be used as a best execution of your finances....although it is cheaper to buy a Mustang....but who the hell wants one of those...

KevinDavid

love the color, how much was the paint job?

FUTURESTRADER

First of all, I am financial guru.

There is not enough info for anyone to answer your question.

I will say this:

Auto loan
Principal borrowed $50,000
60 month loan (5 years)
Int rate = 7%
Monthly payment approx $1,000

HELOC (Home Equity Line of Credit)
$50,000
Interest only payment (NO principal payment) for 10 years, 7% on 50k = $3,5000 year Tax Deductible (30%) Net = $2,400 divided by 12 months = Net $200 month to own a Vette

Place difference in 401(k) maybe company match, mutual fund, etc... and pay back later when you trade-in (do it again) or payoff later.

Either $1,000 or $200, the choice is yours.

I know which one I'd do, and Uncle Sam will help

So what color are ya gettin?

PS You'll have Corvette Title in hand, free and clear. They can repo your home but not the Vette, and in this market it's BAD to have any Equity in a home. Ask anyone in CA about Equity in their home and then the market Tanked and Equity went Bye-Bye. At least you'll still have Hot Corvette.

C5 then C6

FUTURESTRADER

In your example and as a "financial guru" you should, in accordance with Truth in Lending Disclosures", also share the dollar amount the credit will cost our friend under each loan. I'm sure your $200 dollar monthly payment will have an eye opening end.

FUTURESTRADER

If he emails me his address I'll send him a GFE & TIL

PS His balance will always be 50,000. He is making interest payments only. He should take the difference and invest elsewhere so eventually he can pay it down at trade-in or pay if off. A car loan LOCKS him in Every month at a $1,000 bucks no matter what. I'd rather have the Flexibility, Uncle Sam write off, and Vette title in hand.

rocket1

I paid cash for mine and it was way harder than financing.
The dealer gave me a hard time about an out the door price because they wanted me to finance,

C5 then C6

I hear you and would do the exact same thing as you, just wanted to clarify....

goatts

I used my HELOC to pay off the car loan. Nice thing about the HELOC is that as you pay it down your monthly payments drop.

NVR LAT

Personal opinion only, but if you have LOTS of equity in the home why not use the tax advantages? I didn't have to do it, but from what I've been told, it's not a bad deal. That is ,in my opinion, that you have plenty of equity in the home already. I would never buy a car that way if you were going to eliminate, or use up, the equity you have built up in your home.

But then again, I'm just a car guy, not a tax consultant...Good luck with your decision!

AORoads

Wow, big acronyms. Good Faith Estimate and Truth In Lending. Impressive.

Reality check: all those people, you know, THOSE people, who "save" hundreds of dollars per month by NOT paying for a car LOAN. Yeah, those people.

How many take that "saved" money and put in a 401K? 1%, 5% of them? You think that many?

That's why I say, and others say, don't do it.

This great thing called the "finance industry", a lot of which is based on smoke and mirrors. And musical chairs.

Remember that one from when you were a kid? Everyone walks around looking happy. And a chair or two is pulled away. And then the music stops.

The music stopped in 1987, October 19, to be exact. The music stopped in 1998. The music stopped in 2000--remember Dot-Com? And finally, most recently, the music stopped in mid/late 2006 in real estate.

To paraphrase, if you learn nothing from history, you are condemned to..... you finish it the way you want. It's your home equity, your potential car, and you can choose to listen to the siren song of the financial "industry." Or not.

RedC6

Dude, are you always looking for ways to post pics of your custom color C6 or what? Give me a break...