Can you take money out of home equity and use a car loan to pay that back?
Friday, 13. August 2010
After a month of searching, I found 2 trucks that I was interested in buying. Called the first place, and they sold it just the day before. Called the second place, and they sold it just moments before. I decided to look locally and found a truck on craisglist in a nearby neighborhood by a private seller. It is a steal of a deal!!! I’m afraid they will sell it before I get a car loan from my credit union. I was wondering, can I take the money out of my home equity, then use the car loan from the credit union to pay that off since it’s a much better interest rate?? Just a thought to get things moving quicker. Thanks!
WHAT? Says:
Once the truck is paid, via the HELOC, the credit union won’t give you the second auto loan. One good point, is that the interest you pay on the HELOC is still tax deductible, and not so with the auto loan. But be very cautious in using the equity loan as a credit card, you could end up not being able to afford a mortgage and a equity loan if you put too much on it.
Caveat Emptor Says:
That will not work. The auto lender is not going to hand over cash to you.
efflandt Says:
Maybe your credit is not so good, if you "think" a used vehicle loan would be lower interest than a HELOC. Although, homes have come down in price, they still hold their value better (less risk) than a depreciating asset like a vehicle.
If you buy the vehicle with your HELOC and then try to get a loan for the vehicle, that would be a title loan, which would likely be for less than the vehicle value, at higher interest rate than a normal vehicle loan.
So make sure that the vehicle is what you think it is, and that it does not have hidden problems. You will be putting your home on the line for it. If it sounds too good to be true, it might not be.