Details

Should I use a Home Equity Loan to buy a used car?

Category: Auto Financing Edmonton

Hits: 1024

The above question is a very good one. How does a home equity loan or HELOC compare to a standard rate auto loan? If the equity loan is extended beyond five years you will end up with a VERY USED CAR that is still covered by substantial debt.

Would you risk putting your first asset – your home, in jeopardy? If something were to happen to you and you cannot make the payments, that can and in many cases today, is what is happening.  As housing values are in decline almost everywhere; so does the evaluation of these loans. They are demand loans and can be called at any time without warning if the lending institute so deems. How easy would it be to access a large amount of capital to cover your shortfall if your loan was devalued today?

The other danger is home equity loans do not have a structured repayment schedule.  Like many other people if you do not make more than the required interest only payment the cost of your purchase is well above what you expected to pay for it in the long term. 

Many financial advisors would recommend you use a home equity loan or HELOC for investment purposes only because interest paid is then tax deductible.

Lakewood Chevrolet offers very competitve financing rates for ALL our new or used vehicle purchases.  Be sure to call us with any questions you have !

• < Prev
• Next >