Auto Loan Vs. Home Equity Calculator
Should I finance my car with an auto loan or home equity loan? This calculator will help you find the better deal...
Auto Loan Vs. Home Equity Loan
If you are thinking of buying a new car, you have two options to finance it. You can either take a standard auto loan or a home equity loan.
A home equity loan is usually used to finance large expense payment like home renovation of car purchase. Home equity loan is generally preferred by consumers since it often have lower interest rates than a standard auto loan. Sometimes, it can even beat the zero percent interest financing deals offered by dealers. The interest for home equity loan may also be tax deductible. Before you make a decision of buying a car, get all the details from the financing companies, do some calculations and compare a standard auto loan against home equity loan. The auto loan vs. home equity loan calculator will help you determine which is the best option to finance your car purchase.
Is A Home Equity Loan The Best Option To Finance A Car?
Home equity loans often have lower interest rate compared to a standard car loan. Though loan rates vary depending on the market rates, most experts still believed that you can save as much as 15% of the total car purchase for loan equity home compared to a standard home loan. Know the interest rates offered by your car dealer and plugin the figures in the above auto loan vs. home equity loan calculator to find out how much savings you can make.
Another advantage of a home equity loan is that you are able to deduct the interest paid for the new car from your taxes. The interest paid to the car financing companies for a standard auto loan is not deductible.
Though home equity loan has lots of advantages over a standard auto loan, it also has its share of disadvantages. One disadvantage is the interest rate is variable. Thus, interest rates may rise suddenly since it is dependent on the market rates. If you don’t have a buffer fund, this could possibly affect your monthly household budget. If you fail to pay the car monthly payment, your vehicle will be repossessed. If you make defaults in your home equity loan payments you might even be forced to sell your house since your home will be used as a collateral for your loan. Before choosing this option, make sure that you should be able to afford to pay your monthly payments throughout the loan term.
Second disadvantage is the processing fee and down payment may be higher compared to a standard auto loan. You should have enough savings to cover up for these payments.
Understand The Terms Of The Loan
Potential car buyers usually choose the standard auto loan to finance their car purchase. Since home equity loan has been quite affordable, many opt for this method of financing their purchase. Whatever method of payment you use for financing your car, be sure you understand the terms and conditions of your loan. Calculate and compare which option is more practical for your needs using the auto loan vs. home equity loan calculator.
Auto Loan Vs. Home Equity Loan Terms and Definitions
Related Auto Loan Calculators: