web analytics

Using A HELOC To Pay Off A Car

July 22, 2011 · 139 comments

in Personal Finance

A few years ago, we opened a Home Equity Line of Credit (HELOC) when we remodeled our home.  When we applied, the credit union warned us that they had not approved a HELOC for quite awhile since so few people had equity in their house.  Lo and behold, we did get approved.

Our remodeling was complete about 2.5 years ago, and we paid off the loan quickly.  However, we left the line of credit open just in case we ever needed the money, and the account was free to keep open.

This year though, we did use our line of credit again.  When I bought our new Ford Escape, I financed the car at the dealership so that I could get a discount being offered for financing.  Then yesterday, I paid off the car loan, using funds from my HELOC.

The Benefits of Using A HELOC To Pay Off Your Car

As of yesterday, my car is ‘paid off’, and I should be receiving my car title in the mail in the next month or so.  Even though I still owe the same amount of money, I will actually pay less over the life of the loan because:

  1. The interest rate is lower on my HELOC than what I was paying on my auto loan.
  2. I can deduct the interest paid on my HELOC on my Federal Income Taxes, which I could not do with the auto loan

Not only is it cheaper, but it is more convenient.  My HELOC is through the same credit union as my checking/saving accounts.  So, using electronic banking, I can easily move money between my checking account and HELOC.

A HELOC Is Not the Solution For Everyone

I have no worries about further ‘mortgaging’ my house with a HELOC because we have so much equity built up. Also, we don’t plan on moving for many years, so we don’t have to worry about needing to suddenly come up with the money to pay off the HELOC and the mortgage. (Although, even at today’s housing prices, we could easily handle the remaining owed on the mortgage plus the debt on the HELOC.)  Plus, we only use the HELOC for large purchases such as vehicles. We don’t use it as a resource for vacation or other discretionary expenses.  It has a very defined purpose, so there is never the temptation to use it for ‘extras’.

However, I do NOT recommend a HELOC for people in the following situations:

  1. Moving soon. You don’t want to have to pay the loan down in the near future, along with your mortgage.
  2. Overspenders. If you don’t have a tight control on your spending habits, then avoid a HELOC at all costs.  Overspenders may just view a HELOC as a giant pot of money that is just waiting to be spent.
  3. Heavy existing debt. For those that already owe a lot of money, a HELOC is probably not the answer for you.  (Unless you have some financial guidance and would use it to consolidate your debts.  HOWEVER, the credit cards that get paid off would need to be destroyed.)  Plus, it may be harder to get approved if you already have a lot of debt.

Overall for us, a HELOC has been a wonderful thing.  However, it is a variable rate loan.  (Our current loan is prime – .25%, with a floor of 4.25%)  I plan on paying this off fairly quickly though, so the variable aspect of the rate does not worry me.

Have you ever taken out a HELOC?  If so, what was your experience?

If you enjoyed this post, please leave a comment or subscribe to the RSS feed to have future articles delivered to your feed reader. Thanks for visiting!!!

{ 136 comments… read them below or add one }

101 Centavos July 22, 2011 at 7:25 am

As you said, it’s not for everyone. As long as you’re buying a hard asset, even a fast-depreciating one like a vehicle, it makes sense. Spending for vacations or other fluff expenses is a bad idea.

Reply

Holly July 22, 2011 at 8:00 am

I used mine to fund a used car purchase last January and plan to have it paid off by December. Rate is 3.74%. Only thing I would caution against is that the bank can ‘call in’ the loan any time if they feel that you are a credit risk or that your property’s value has depreciated significantly (meaning you don’t have as much equity as when you originally applied for the HELOC).

This happened to a couple I met recently. Their house was purchased around $400,000 and now it’s appraised at about $265,000.

Reply

Money Reasons July 22, 2011 at 9:25 am

I’ve never taken one out, but I always thought that it was a brilliant idea. Like you I also wanted one for an emergency purposes. I still might open one just for that purpose alone…

Reply

Car Negotiation Coach July 22, 2011 at 10:17 am

Kris, this is a fantastic idea! since you’re prepared to pay off if the variable rate jumps up. If i had a HELOC i’d do the same thing!

Reply

Nicole July 22, 2011 at 10:59 am

Nope! And I just looked at our credit union and car loan rates are lower than HELOC rates.

Some states have laws making it more difficult to do HELOCs, so maybe that’s why.

Reply

MoneyCone July 22, 2011 at 12:04 pm

Great example of using credit responsibly, Kris!

Reply

First Gen AMerican July 22, 2011 at 3:58 pm

We have always been a pay as you go family. If we didn’t have the money, it didn’t get remodeled. I think that’s why the kitchen took 10 years to do even though it was first on my list. Uh, oh, the furnace is leaking CO, time to tap the kitchen fund and get a furnace..Crap (literally), there’s roots growing through our sewer line…there goes the kitchen fund again. I guess I was glad I had a kitchen fund because I tapped it at least 5 times with unplanned expenses before we finally got around to using it for it’s actual purpose.

My credit union is offering like 2.99% financing on cars right now. I am surprised your home equity loan would beat those kinds of rates or maybe my bank just has really good deals.

In general I wouldn’t advocate doing what you just did unless it’s someone that has a good head on their shoulders like you. If you fall behind on your car payments, they take your car. If you fall behind on house payments, they take your house, so generally I don’t like using my house as collateral for non house purchases.

Reply

krantcents July 22, 2011 at 4:59 pm

I have had a line of credit since 1985. About three years ago, I converted the unsecured line of credit to a HELOC because of the tax deduction and lower interest rate. I use this as a back up for emergencies.

Reply

Little House July 22, 2011 at 7:54 pm

I think the way you’re using your HELOC is an excellent example of how to use one. Paying off a large expense at a really low interest rate is the way to go, especially since you plan on paying it off sooner than later and have very little debt to begin with. The points you made are very wise; only take one out if you have little debt and have a very definite plan!

Reply

retirebyforty July 23, 2011 at 12:14 am

I used a HELOC to pay for a car about 5 years ago. It was great to have the tax deduction, but it was still debt. I was happy when we finished paying it off.

Reply

Sandy @ Journey To Our Home August 10, 2011 at 7:21 pm

I believe that using a HELOC is definitely not for everyone. Though careful spenders can get away with it AND save money!
Great job!

Reply

PaydayDesk October 1, 2012 at 4:10 am

Sometimes HELOC is really a good option, usually interest rates on this kind of loan are more than affordable. But I totally agree that HELOC isn’t a solution for every one. It’s risky enough because your house is a collateral, that’s why this loan needs an extra responsible attitude. I think that people who are tend to overspend do not have to use these loans. I’ve never considered taking out a HELOC, but if I will ever have a need to do that I’ll definitely think well and try to look for other options available for me before making a final decision.

Reply

PatrickLem September 4, 2021 at 3:26 am

advanced gay dating
grindr gay dating
quality gay men dating sites

Reply

hydroxychloroquineOt September 5, 2021 at 3:54 am

buy hydroxychloroquine canada chloroquine phosphate chloroquine and plaquenil

Reply

Henryjuilk September 9, 2021 at 5:19 am

gay dating in a rural area
gay dating websites uk
gay online dating nyc

Reply

Lavone Stitz September 12, 2021 at 1:34 pm

Spot on with this write-up, I absolutely believe that this website needs a lot more attention. Iíll probably be returning to read through more, thanks for the info!

Reply

Julene Gara September 12, 2021 at 3:42 pm

I went over this web site and I believe you have a lot of superb info , saved to favorites (:.

Reply

Henryjuilk September 13, 2021 at 10:08 pm

dating around netflix gay asian
kenya gay dating site
gay dating ads in biloxi

Reply

what are the side effects of hydroxychloroquine September 16, 2021 at 2:15 pm
accutane for acne September 23, 2021 at 6:03 pm
school holiday September 24, 2021 at 5:43 am

I have been reading out some of your stories and it’s pretty clever stuff. I will definitely bookmark your website.

Reply

chloroquine side effects September 24, 2021 at 1:33 pm
ZetsBlessy September 25, 2021 at 5:18 am

plaquinol https://hydroxychloroquinex.com/ hydroxychloroquine cost at costco hydrocloquin

Reply

pharmacepticacom September 27, 2021 at 6:51 pm

chloroquine drug class https://www.pharmaceptica.com/

Reply

buyprovigil September 30, 2021 at 10:49 pm

sunosi vs modafinil buy modalert online

Reply

bactrim ds 800 160 September 30, 2021 at 11:39 pm

Trimethoprim side effects bactrim antibiotic

Reply

quinine for lupus October 2, 2021 at 1:52 am

how long has hydroxychloroquine been used https://plaquenilx.com/# hydroxychloroquine sulfate 200

Reply

writing a biography essay October 7, 2021 at 11:56 am

You’ve gotten wonderful thing these. https://essayghostwriter.com/

Reply

prednisonetaper October 7, 2021 at 12:06 pm
essaysnet.com October 9, 2021 at 12:08 am

I enjoy looking through your websites. Thanks a ton! https://essaysnet.com/

Reply

write an opinion essay October 9, 2021 at 2:05 am

thank a lot for your website it aids a great deal. https://essaypoints.com/

Reply

cheap custom essay writing services October 9, 2021 at 4:44 am

Thanks, this website is really useful. http://https:/essaytag.com/

Reply

GustavoAbrab October 9, 2021 at 11:41 am

personal statement editing
type my essay for me

Reply

Matthewcag October 13, 2021 at 12:59 pm

dissertation editing rates
cpm org homework help

Reply

ciw exams October 13, 2021 at 3:09 pm

I like this web site so much, bookmarked. “American soldiers must be turned into lambs and eating them is tolerated.” by Muammar Qaddafi.

Reply

casino no deposit welcome bonus October 13, 2021 at 8:26 pm

Many thanks, this website is very helpful. https://online2casino.com/

Reply

kasino bonus October 14, 2021 at 12:14 am

Wow, gorgeous website. Thnx … https://onlinecasinos4me.com/

Reply

isotretinoine October 14, 2021 at 9:11 am

roaccutane side effects isotretinoin side effects

Reply

bactrim antibiotic October 14, 2021 at 6:23 pm

https://bactrimxazole.com/ trimoxazole davis pdf

Reply

gearfefld October 20, 2021 at 4:18 pm
gearfakbs October 21, 2021 at 12:27 am

doctors for hydroxychloroquine plaquenil and alcohol

Reply

gearfwdde October 21, 2021 at 6:20 am

buy chloriquine chloroquine vs hydroxychloroquine

Reply

kinky curly knot today October 22, 2021 at 10:22 am

Thank you for your blog.Really looking forward to read more. Want more.

Reply

superslot October 24, 2021 at 12:31 pm

A round of applause for your blog post.Really looking forward to read more. Keep writing.

Reply

find this October 24, 2021 at 5:47 pm

I think this is a real great blog.Thanks Again. Will read on…

Reply

sign up bonus casino October 26, 2021 at 3:37 am

Regards for sharing your amazing website. https://casinosonlinex.com/

Reply

blackjack online real money October 26, 2021 at 6:23 am

say thanks to a lot for your website it assists a lot. https://onlinecasinoad.com/

Reply

Labstdcm October 26, 2021 at 6:24 pm

chloroquine over the counter buy plaquenil online

Reply

gearfufis October 26, 2021 at 6:26 pm

chloroquine mechanism of action hydroxychloroquine covid 19

Reply

gearfmqxw October 27, 2021 at 2:38 am
cash casino games October 27, 2021 at 5:40 am

Superb Web page, Continue the useful job. Thanks a ton! https://casinoonlinet.com/

Reply

betonline casino October 27, 2021 at 7:31 am

Terrific web site you possess going here. https://casinoonlinek.com/

Reply

gearfmbzb October 27, 2021 at 4:19 pm

chloroquine pills plaquenil weight gain

Reply

have a peek at this web-site October 28, 2021 at 3:09 pm

This is one awesome article.Really looking forward to read more. Will read on…

Reply

writing an essay introduction October 29, 2021 at 4:04 am

Incredible, this is a valuable website. https://student-essay.com/

Reply

persuasive essay writing October 29, 2021 at 7:51 am

Greetings, tidy websites you have presently. https://multiessay.com/

Reply

write about yourself essay October 29, 2021 at 8:19 am

I adore this website – its so usefull and helpfull. https://buy1essay.com/

Reply

writing personal essays October 30, 2021 at 9:56 am

Unbelievably user friendly site. Immense information readily available on few clicks on. https://dollaressays.com/

Reply

write a good essay October 30, 2021 at 1:32 pm

Thanks for the purpose of furnishing this type of great data. https://essaytodo.com/

Reply

downloadlagu321 October 30, 2021 at 2:44 pm

wow, awesome blog article.Really looking forward to read more. Keep writing.

Reply

???????? ???? ??????? October 30, 2021 at 9:47 pm

Thanks again for the article.Thanks Again. Really Great.

Reply

RADIAN RAPTOR CHARGING HANDLE October 31, 2021 at 5:50 am

I loved your blog.Thanks Again. Awesome.

Reply

lovetts pet care of boulder October 31, 2021 at 7:48 pm

I think this is a real great blog post. Will read on…

Reply

www.thedropshadow.com November 1, 2021 at 5:25 am

Very informative blog post.Really thank you! Great.

Reply

????? November 1, 2021 at 11:00 am

Im thankful for the article.Thanks Again. Much obliged.

Reply

ambbet November 1, 2021 at 10:44 pm

Appreciate you sharing, great post.Thanks Again. Much obliged.

Reply

gearfnmuc November 2, 2021 at 3:10 am
Labsevgk November 2, 2021 at 3:14 am

plaquenil 200 mg is hydroxychloroquine an immunosuppressant

Reply

gearfntab November 2, 2021 at 11:35 am
gearftszf November 2, 2021 at 12:55 pm

where can i get hydroxychloroquine chloroquine brand name

Reply

gearfrkav November 3, 2021 at 3:24 am

chloroquine us side effects for hydroxychloroquine

Reply

BrandonZobof November 3, 2021 at 3:17 pm

exploring writing paragraphs and essays
writing an introduction to an essay
online essay writing services

Reply

Buy Tramadol Online without Prescription November 3, 2021 at 9:38 pm

Hey, thanks for the blog. Great.

Reply

writing college essays November 3, 2021 at 10:48 pm

Thanks for supplying this sort of terrific information. https://checkyouressay.com/

Reply

writing opinion essays November 4, 2021 at 1:32 am

Thank you! It is definitely an good website! https://essayprepworkshop.com/

Reply

adam and eve pump November 4, 2021 at 5:45 pm

A big thank you for your blog post.Much thanks again. Will read on…

Reply

adam and eve penis pumps November 5, 2021 at 1:05 am

I appreciate you sharing this article.Really thank you! Great.

Reply

asian pocket pussy November 5, 2021 at 9:02 am

Thanks for the blog.Thanks Again. Want more.

Reply

online casino payza November 5, 2021 at 6:43 pm

Love the website– extremely user friendly and whole lots to see! https://online-casinos-hub.com/

Reply

silicone penis sleeve November 7, 2021 at 9:09 am

Appreciate you sharing, great post.Much thanks again. Cool.

Reply

pressure washing tampa November 7, 2021 at 11:45 pm

Great blog.Thanks Again.

Reply

gearfqcjs November 9, 2021 at 1:31 am
gearftcrl November 9, 2021 at 1:40 am
gearfizph November 9, 2021 at 5:57 pm

hydroxychloroquine covid hydroxychloroquine moa

Reply

best silicone g spot vibrators November 9, 2021 at 8:15 pm

I am so grateful for your post. Keep writing.

Reply

how to use rabbit vibrators November 10, 2021 at 8:57 am

A round of applause for your blog post. Great.

Reply

Koko Nuggz November 10, 2021 at 9:31 pm

Thanks so much for the blog. Really Great.

Reply

alex more November 14, 2021 at 12:02 am

I really love this post I will visit again to read your post in a very short time and I hope you will make more posts like this.

Reply

gearfeefb November 16, 2021 at 5:02 am

side effects of hydroxychloroquine aralen hcl

Reply

gearfoafa November 17, 2021 at 2:11 pm
gearfewtv November 18, 2021 at 4:23 am
card games nude adult sex games November 18, 2021 at 10:41 am

You’ve wonderful stuff on this website. https://sex4games.com/

Reply

Amb19 November 18, 2021 at 8:08 pm

Thanks a lot for the blog article.Thanks Again. Fantastic.

Reply

gearfzehq November 19, 2021 at 1:07 am

buy hcq hydrochlor

Reply

keto frittata November 19, 2021 at 11:36 am

Thanks, this website is very valuable. https://ketogenicdietinfo.com/

Reply

best paint sprayer November 20, 2021 at 5:20 pm

I really enjoy the article.Really looking forward to read more. Great.

Reply

free sex games no credit card November 20, 2021 at 6:51 pm

Thanks, this website is very helpful. https://sexygamess.com/

Reply

cottage cheese keto November 21, 2021 at 3:27 am

Thanks meant for providing many of these well put together post. https://ketogendiet.net/

Reply

ArthurVip November 25, 2021 at 5:41 am

adult sex games online
sex porn fuck xxx games online
my free sex games

Reply

tree pruning November 25, 2021 at 11:46 am

I appreciate you sharing this post. Keep writing.

Reply

???? November 25, 2021 at 3:03 pm

It’s also effective for romantic time with your lover, so why don’t you learn it? Full body massage is not as difficult as you think. Simple preparation and know-how

Reply

mouse tunnel trap November 26, 2021 at 3:48 am

I have not checked in here for some time since I thought it was getting boring, but the last several posts are great quality so I guess I¦ll add you back to my everyday bloglist. You deserve it my friend 🙂

Reply

birthday party decorations November 26, 2021 at 6:07 am

Im obliged for the blog post. Cool.

Reply

send money to Pakistan from UK November 26, 2021 at 10:19 am

I loved your blog article.Really looking forward to read more. Will read on…

Reply

Does Trimtone really work November 26, 2021 at 1:17 pm

Say, you got a nice article.

Reply

???? November 27, 2021 at 6:37 am

Job sites, massage, singing bars, sexy bars the fastest and easiest way to make money

Reply

??? November 27, 2021 at 4:52 pm

Really appreciate you sharing this blog article.Thanks Again. Keep writing.

Reply

???? November 27, 2021 at 6:21 pm

Very informative post. Want more.

Reply

?????? November 28, 2021 at 5:32 am

Great, thanks for sharing this blog.Much thanks again. Cool.

Reply

DonaldTup November 28, 2021 at 7:01 am

3d sex games cheater walkthrough
sex games tumblr
nude japanese sex games

Reply

???? November 28, 2021 at 5:03 pm

Fantastic blog article.Really thank you! Really Great.

Reply

search properties for sale November 29, 2021 at 12:39 pm

Great, thanks for sharing this post.Really looking forward to read more. Keep writing.

Reply

???????????? November 29, 2021 at 10:57 pm

Very informative blog.Really looking forward to read more.

Reply

pros and cons of realistic dildo November 30, 2021 at 3:26 am

Really appreciate you sharing this article post.Really looking forward to read more. Cool.

Reply

adam and eve vibrators November 30, 2021 at 12:46 pm

Enjoyed every bit of your blog article.Really thank you! Awesome.

Reply

home 4 sale November 30, 2021 at 10:32 pm

Major thanks for the blog.Really looking forward to read more.

Reply

123 movies December 2, 2021 at 3:45 am

Very informative article.Really thank you! Fantastic.

Reply

good nature rat trap December 3, 2021 at 3:48 am

I saw a lot of website but I think this one holds something extra in it in it

Reply

Drug Addictions December 3, 2021 at 5:51 am

I think this is a real great post.Thanks Again.

Reply

action casino December 3, 2021 at 12:04 pm

Great article post.Thanks Again. Keep writing.

Reply

Ronaldecold December 3, 2021 at 3:37 pm

mature sex games
emoji sex games
best virtual sex games

Reply

Europa-Road konténeres szállítmányozás December 3, 2021 at 4:36 pm

I was curious if you ever thought of changing the page layout of your website? Its very well written; I love what youve got to say. But maybe you could a little more in the way of content so people could connect with it better. Youve got an awful lot of text for only having one or 2 images. Maybe you could space it out better?

Reply

Ronaldecold December 3, 2021 at 5:53 pm

computer sex games
jsk sex games
free sex games for kids

Reply

Guest posts December 3, 2021 at 7:13 pm

Major thanks for the blog article.Thanks Again. Great.

Reply

more information here December 4, 2021 at 5:26 pm

wow, awesome post. Much obliged.

Reply

Ronaldecold December 4, 2021 at 7:17 pm

keto vs atkins
keto diet shark tank
keto ketchup

Reply

Ronaldecold December 5, 2021 at 2:37 pm

keto diet fruits
are lentils keto
keto for dummies

Reply

Ronaldecold December 5, 2021 at 4:56 pm

keto trim diet
keto protein bars
keto nuts

Reply

more information here December 5, 2021 at 6:32 pm

Very neat post. Keep writing.

Reply

mouse trap December 5, 2021 at 9:47 pm

I love your writing style truly enjoying this internet site.

Reply

december global festivities December 6, 2021 at 5:36 am

Really enjoyed this blog article.Really looking forward to read more. Want more.

Reply

canvas price in Pakistan December 6, 2021 at 12:27 pm

A round of applause for your article post. Great.

Reply

feet finder December 6, 2021 at 6:41 pm

wow, awesome blog. Keep writing.

Reply

website speed optimization December 7, 2021 at 5:09 am

Good write-up, I am regular visitor of one’s site, maintain up the nice operate, and It’s going to be a regular visitor for a long time.

Reply

Mind Kite December 7, 2021 at 9:36 am

Hey, thanks for the blog article.Thanks Again. Awesome.

Reply

more information here December 7, 2021 at 4:53 pm

Awesome blog post. Really Great.

Reply

Cancel reply

Leave a Comment

{ 3 trackbacks }

Previous post:

Next post: