How many people use HELOC to buy a car? Do you guys think it's worth it? I think it sucks when most part of my monthly payment is going to interest and not principal. But then again, it lowers my monthly A LOT! What do you guys think? Good idea? Bad idea? Thanks guys!

Leo

 

HELOC? care to elaborate a bit?

 

Using house loan for car I assume.

 

Ummm, 30 years to pay off a car? Might as well grab your ankles or pick up the soap. I'd rather drive a moped than be in debt for the rest of my life on a $20,000 purchase.

Or I don't have a clue what HELOC really means.

 

HELOC = home equity line of credit.

For one, I am not going to keep my current property. I am only 24, I am planning on selling it or rent it out in five years. And home loan doesn't have to be 30 years. In fact, I don't know anyone would actually go through 30 years.

When it comes to properties, you are not really 'in debt'. Unless sht happens, it's more of an incoming for you in a long run. So basically I would be using the money I 'make' from the property to pay for the car. This way, my monthly payment would be extremely low, and that opens up a lot more cash for me to do other investment to make more money. The way I see it is that I could free up more money to make more money if I use HELOC. But I also know I'll be paying almost nothing but intereset in the beginning.

Can I get some feedback from people that owns properties or at least know what HELOC is? No offense to people, just that those don't own a property has a different mind set. I know I did. Before I got my property, I was going to get a car, but ended up getting a condo. After going through the buying process and learning even more now, it's definitly a better decision. Before the condo, I kept on thinking saving and other investment would have a bigger return. But it all make sense now.

Making $25k-$65k in 8 months in equity is not bad.

 

I'm still in highschool, and don't really have a clue. However, I know my parents did something like this to buy our new car (volvo XC70) because it was cheaper/better rates. However, we've had the house for a while, and it will be paid off in 2 years since its mostly paid off, and I believe that most of the money goes to paying it off, not interest. Anyway, it made a lot of sense for them, they refinanced it right beforehand cuz of the low interest rates. From what I've learned about the whole loan/interest thing though, wouldn't you be paying mostly interest in the beginning even if it was just house payments? Good Luck

 

Yeah, I know about the interest thing...
It sure make a whole lot moe sense for your parents since they only have 2 years left. But for me, damn, that's a LONG way to go.

 

Okay, I've owned property for a little while ( ) so I'll chime in here.

Using a HELOC to buy a car is probably the best thing you can do outside of buying it outright with cash .

Your equity line of credit is really just using the equity you have in your real property (house) as surety against a line of credit. Because it's based on real property, the HELOCs tend to have lower rates. This is also because you aren't really borrowing on "credit" (as I said earlier, you are using established equity as surety for the line of credit).

Now, this has several advantages. 1) You are borrowing from and paying back YOURSELF. The interest rate is really only for the bank to advance you the money off of your equity. 2) Because you are borrowing off of your equity, any interest you pay is TAX DEDUCTIBLE. 3) You can pay back as much as you want, as long as you meet the minimum payment the bank sets. This minimum payment is usually a LOT lower than a standard 5 year car note. 4) Anything you pay OVER the minimum goes straight to your principle (this holds true for any loan, BTW). However, because it's usually lower, you are paying more off at a time. For instance, if you have.. say.. a 350/month payment on a regular car loan, and you have only a 150/month payment on the HELOC for the same car, but still pay 350, you pay off the loan a LOT faster.

So, let's see... you already have money in your property. You take that money out to buy a car. You get a tax break on interest you pay your loan. You can pay it off a lot faster if you make payments as if you had a regular car loan.

What's not to like?

shadowcat

 

IBthehousingmarkethiccupsandyou'reupsidedownonyour condo

 

gahahhahahahahhahahahahahaha

 

yes, I was thinking about that too... but, hey, if that is really going to happen, I would still have the car right.