Paying for your car with a home equity loan
Consider the benefits and risks before choosing this type of financing.
Here are some of the benefits of going with a home equity loan rather than a traditional auto loan: Low rates. Auto dealers are in the car business, not the money-lending business, so when they offer their own financing deals, they almost always mark up the rate. A home equity loan often carries more favorable terms than what you would get at the car lot. Bargaining power. By getting approved for a home equity loan before you visit the dealership, you may be able to negotiate a better price. In addition, dealers that advertise zero-percent financing often offer a rebate to buyers who pay the full price up front.
M
A home equity loan or home equity line of credit is a popular way to pay for a home renovation. But these low-interest loans may also be a good choice for a major purchase, such as a new vehicle.
SA
Read the full story.
Home equity loans also carry inherent costs and risks, however, and are not always the most appropriate way to finance your new car.
Request a home equity loan now and let Lenders compete for your business. Use the LendingTree Auto Loan vs. Home Equity Loan Calculator to compare loans.
PL E
Request a mortgage and get customized offers from up to four Lenders in minutes, plus receive a FREE LendingTree Guide to Mortgages. Request a mortgage through LendingTree now. When Banks compete, You Win!® Information on other great LendingTree services: Mortgage & Refinance Home Equity Products Auto Loan & Refinance Pay off Your Debt Find a REALTOR® FREE Credit Score and Report
Read other articles on auto loans, leases and refinance loans: Checklist: Questions to ask your auto lender Comparing auto loans can be easy How to avoid upside-down car loans You can protect your loved ones by ensuring the proceeds of your life insurance policy are sufficient to pay off the balance of your mortgage. Request quotes on term life insurance now.
Six credit-scoring myths Don't be misled by rumors. Understand what truly affects your credit score so you can work to improve it. Benefit from a debt consolidation loan Save money and get control of your finances by consolidating several debts into a single monthly payment.
Teaching kids about money Helping your kids to develop good money habits from an early age can bring life-long benefits
SA
Q: I want to purchase a home. My credit score is about 720, I have about $20,000 in the bank and I owe about $14,000 on a loan and $5,000 on credit cards. Would it be wise to try to pay off the loan prior to buying the home in order to have less debt but then only a $10,000 deposit? A: Though you don't mention the interest rate on the $14,000 loan, interest rates on credit cards tend to be high since it's unsecured debt. My winning advice is to pay off that $5,000 in credit card debt and use about $10,000 for a down payment on your home. You'll essentially be swapping high-cost credit card debt for less costly mortgage debt.
M
PL E
Most lenders consider a credit score of less than 620 to be "sub prime," so it's a good idea to check your credit rating and, if necessary, take steps to improve it before applying for a loan. Request your free online credit report and score from LendingTree.
More stories in the Knowledge Center:
Mortgage rates are usually lower because they are secured against the value of your home, and the interest you pay is generally tax deductible (check with a tax advisor about your particular situation). Plus, you're building equity. But keep in mind that being a homeowner can mean unexpected maintenance costs, so make sure you set aside some savings for emergencies and closing costs on your mortgage.
Personal finance adviser Jennifer Openshaw is the host of ABC Radio's "Winning Advice." Get more winning advice from Jennifer.
Winning Advice is provided by Jennifer Openshaw and Openshaw's Family Financial Network, who are solely responsible for its content.
Related LendingTree links:
To get a better idea of how much you can afford, use our mortgage calculator.
REALTOR® -- A registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics. This message may be a recurring mailing. When you completed your loan request, you asked us to send you information via email regarding money saving tips and special offers. At LendingTree, your privacy is our chief concern. If you would like to unsubscribe from our mailings, read our privacy policy or terms of use, or to see how LendingTree is licensed, please use the appropriate links below. Unsubscribe | Privacy Policy | Terms of Use | Disclosures and Licenses LendingTree, LLC (formerly known as LendingTree, Inc.), 11115 Rushmore Drive Charlotte, NC 28277
SA
M
Get Jennifer Openshaw’s Quick and Easy Budget Kit FREE when you complete a home loan request through LendingTree. Start your request now.
PL E
And remember -- don't run up your credit card balance again once you've paid it off. Only charge what you can pay each month, and set up a plan to accelerate paying off that $14,000 loan by increasing your monthly payments. If you're able to do that, you'll maintain your good credit score and you're sure to be a winner!