Anybody use a HELOC?

[notlimahttocs]

Still waiting to get my order...build week of 11/8. I am getting my financing lined up and I'm seriously considering just going for a HELOC to get a low rate. Anybody out there use a HELOC? Regret it? Glad you went that route?

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[Oceannomad]

Um. Explain what a HELOC is first…

 

[Blitzjb]

Still waiting to get my order...build week of 11/8. I am getting my financing lined up and I'm seriously considering just going for a HELOC to get a low rate. Anybody out there use a HELOC? Regret it? Glad you went that route?

You get get the same low rate at a credit union without using your equity. and It is much easier. The heloc is affected by changing interest rates and the upcoming correction in the housing market.

 

[Bronc-Itus]

Went with BB&T on Monday. 836 credit score. Auto loan- quoted 2.44 closed at 2.33. Heloc not necessary for a low rate.

 

[Bronc-Itus]

Um. Explain what a HELOC is first…

Home Equity Line Of Credit. Aka- 2nd mortgage.

 

[Oceannomad]

Home Equity Line Of Credit. Aka- 2nd mortgage.

I’m a government employee…see way too many acronyms…acronyms get old, thank you

 

[JimmyG]

I’m a government employee…see way too many acronyms…acronyms get old, thank you

You're not alone, I didn't know what that was either. I was thinking it had something to do with rotary a/c. LOL um no.

 

[MyATV]

I guess if you can get a low, fixed rate, sure.
My credit union (DCCU) is doing 1.78-percent car loans up to 60 months. Their home equity loans are above 4-percent fixed.

 

[atonge40]

As someone who works at a credit union, I’d tell you not to use a HELOC for a car purchase when rates on auto loans right now. Our HELOC has a 1.99% promotional rate but then it goes to a floor of 4.5%. Meanwhile, we’ll do a 120 month auto loan at 4.5%. 12-84 months are 1.99% to 3.25% for the best tiers. Plus, the interest on your HELOC is not tax deductible for a vehicle purchase. While I have a HELOC, I mostly have it as a $100k emergency line of credit. I even pay for home projects with cash or an unsecured loan with rates lower than my HELOC. With this low rate environment, you should be using a HELOC for large home improvements and then probably refi your first and second mortgage at 2-3%.

 

[atonge40]

I guess if you can get a low, fixed rate, sure.
My credit union (DCCU) is doing 1.78-percent car loans up to 60 months. Their home equity loans are above 4-percent fixed.

Gotta price that interest rate risk in there. 4% fixed is great on a HELOC but car rates are way better right now.

 

[Happytown]

It also costs 1k-2k to "close" on the HELOC, just to establish the line of credit

 

[atonge40]

It also costs 1k-2k to "close" on the HELOC, just to establish the line of credit

Not everywhere. Ours is $299. In the beginning of the year we usually waive the application fee for a few months.

 

[JohnnyBronco]

As someone who works at a credit union, I’d tell you not to use a HELOC for a car purchase when rates on auto loans right now. Our HELOC has a 1.99% promotional rate but then it goes to a floor of 4.5%. Meanwhile, we’ll do a 120 month auto loan at 4.5%. 12-84 months are 1.99% to 3.25% for the best tiers. Plus, the interest on your HELOC is not tax deductible for a vehicle purchase. While I have a HELOC, I mostly have it as a $100k emergency line of credit. I even pay for home projects with cash or an unsecured loan with rates lower than my HELOC. With this low rate environment, you should be using a HELOC for large home improvements and then probably refi your first and second mortgage at 2-3%.

None of the interest on a vehicle loan is deductible - unless it is a business vehicle which should be funded by a commercial loan

 

[mcdoogs]

Well, rates aside the biggest reason to not use a HELOC to fund a new car purchase is that you are now leveraging equity in your property to pay for a depreciating asset like a car.

Say something bad happens and you can't make car payments. Ok, your car gets repoed and that sucks. Same thing happens and you can't pay your HELOC though....that situation could suck way worse. Even if nothing catastrophic happens, the interest on the HELOC money spent works against any appreciation your property gains while it remains unpaid (and of course the lender now how a lien on your property if you sell). Same way I wouldnt recommend borrowing against a retirement account to pay for a car

 

[atonge40]

None of the interest on a vehicle loan is deductible - unless it is a business vehicle which should be funded by a commercial loan

Neither is HELOC interest on a vehicle purchase. (In most cases)

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