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Is it wise to get a home equity loan to buy a new car?


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Wiki User
2015-09-03 13:42:03
2015-09-03 13:42:03

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No. Home equity loans are revolving credit lines. In simple terms, that means you could pay on that for three years and not even touch the principal. I wouldn't do it. Maybe rolling it into a consolidation loan if you have enough equity in your home, but not a HELOC.

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No. You want to avoid "institutionalizing" your debt. In other words, you don't want to spend 15 years on an equity loan paying for a car that you might only have 5-6 years. It really depends on your personal situation. If you have lots of equity in a house, and the monthly payments aren't too much, and you expect that the house will continue to appreciate etc. then MAYBE. But what if interest rates rise (equity loans are usually directly tied to the fed rate), or the housing bubble bursts - then you are stuck with those payments forever. Upside is that the equity loan is tax deductible, car loan is not. Do the math!

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Yes, if you have enough equity in one home and want to use it to buy another. Otherwise, no. You cannot use a home equity loan to purchase a home since you have no equity that has accrued.

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No. It is home equity line of credit that is secured by your home. You use it to buy things and if you buy too much and can't make the payments the bank can foreclose and take your home.

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The loan is considered a liability - The value of the company is the equity.

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Most people can not pay the full amount of a home right when they buy it. One must acquire a loan that they can pay off a little each month. Otherwise, they couldn't buy a house.

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Normally it is called an Auto Loan if you are using the vehicle as collateral for the loan. But, you can use something else as collateral such as your home, in which case it would be a Home Equity loan.


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