Does This Make Sense?

[mdcar1]

Does it make sense to take a outstanding car loan and transfer it over to a HELOC? One advantage I see is you can claim the interest paid from a HELOC, does anyone see another advantage, or dis-advantage? The interest rate on both is comparable.

[FarmBoy]

Does it make sense to take a outstanding car loan and transfer it over to a HELOC? One advantage I see is you can claim the interest paid from a HELOC, does anyone see another advantage, or dis-advantage? The interest rate on both is comparable.

Part of the equation is the remaining loan amount and the pay-off period. Moving a note thats satisified in 2-3 years to a note that is stretched out to say 10 years increases the total interest paid. If you intend to sell your house soon then that amount reduces your take away at closing.

One upside is that you own your vehicle free and clear. If something happens to your financial situation at least your car won't get repossessed.

[mdcar1]

i would be paying it down they same amount as i am now, and there is no plan on selling my house, it seems to make sense, right?

[Shayna]

I don't know your whole financial situation, but please consider the fact that by borrowing from a HELOC to pay off a car, you are trading unsecured debt for secured debt.

If something happens and you could not pay back a car loan, they take back the car -- not your house. Not so with a HELOC....

[FarmBoy]

i would be paying it down they same amount as i am now, and there is no plan on selling my house, it seems to make sense, right?

Another angle - I've been reading about the effects that high inflation have on home mortgages. Basically its very favorable to the home owner. With that in mind your better off having the car bundled into the home loan than on its own.