Question

Is it better to borrow $10K on a car loan @ 8.25% for 36 mos. or on a home equity line of credit at 10.2%?

I want to buy a car and need a 36-month loan. I have the choice of $10K loan from e-loan at 8.25% or drawing from a home equity line of credit at 10.2%. I want to know which is the better option in terms of overall cost to me over the 36-month period.

1 month ago - 7 answers

Best Answer

Chosen by Asker

If you take the 10.2% you will pay $11,650 over 36 months Also, a good site is... www ... Hope that helps.

by Lenora G

4 weeks ago

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Other Answers

This is a tough one. How much in fees will you have to pay if you finance using the car as collateral (they will have lien fees and such). I would ask to see a cash price contract and a loan contract. I assume you won't be paying any transaction fees with the Home Equity because you already have it. Now we need to ask will you be able to deduce home equity interest on your taxes, and does it make a difference? Do you already have more than $7000 (or whatever the standard deduction is now) in Schedule-A itemized deductions. If not go with car loan. What is your marginal tax bracket? If you earn $35,000 a year it will be about 15% and for every $100 in home interest you pay you will get to deduct $15 from your taxes. That brings the effective rate to 8.7 %. If you earn $70,000 a year it will be about 27% and for every $100 in home interest you pay you will get to deduct $27 on yorur taxes. That makes the effective rate 7.5% Sorry for the non-yes-or-no answer, but it depends on the circumstances.

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