Using HELOC for Car Purchase

[Anonymous]

I can easily pay cash for a new car, but would rather finance given low interest rates available. I have an untapped HELOC that has a lower interest rate than I could get through a car loan.

Is there any reason not to use the HELOC for a car purchase?

[Anonymous]

You’re using your home as collateral for a depreciating asset. Don’t do that. Just pay cash or take out an auto loan.

[Anonymous]

Anonymous wrote:You’re using your home as collateral for a depreciating asset. Don’t do that. Just pay cash or take out an auto loan.

Eh, not much different than home renovations that return 50c on the $1 and also depreciate quickly.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You’re using your home as collateral for a depreciating asset. Don’t do that. Just pay cash or take out an auto loan.

Eh, not much different than home renovations that return 50c on the $1 and also depreciate quickly.

Sure banker, sure.

[Anonymous]

Anonymous wrote:You’re using your home as collateral for a depreciating asset. Don’t do that. Just pay cash or take out an auto loan.

But what if I can pay off my home in cash/invested assets (outside of retirement accounts)? This is just a pure financial decision.

[Anonymous]

You cannot write off the interest paid on your taxes unless the HELOC was used for the house.

[Anonymous]

Even still, if the rate is lower and no fear of default, hard to see an issue - esp. if you expect that the market generates returns in excess of interest charged.