Has anyone used a Home Equity Loan to buy their S ??
I was wondering if it could be a tax writeoff
12-10-2001, 09:56 AM
#4
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I did not do it, but it is completely legal - you can take out an equity line and go on vacation, blow the money gambling in vegas or buy your favorite car. And the best part is you get to write off the interest at tax time 
12-10-2001, 10:15 AM
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That was part of my original plan on how to get a house and car at the same time with little cash. I was going to get a loan for the house and put like 30k down, and immediately turn around and get an equity loan against my down payment to get the S2000. Plans have since changed.
12-10-2001, 10:50 AM
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you can do anything you want with your home equity loan. the problem is, it will take you 10, 15 or 20 years to pay off the car. if you think you will have more cash in a couple years to pay off the loan, it's not a bad idea to use your home equity loan to buy a car.
12-10-2001, 11:26 AM
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I used a home equity line of credit to buy my S2K. It's different than a home equity loan since the rate is variable. I write off all the interest on the loan and it's perfectly leagl. You can use a home equity line of credit for anything you want. I think a home equity loan is suppose to be used for the home only.
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12-10-2001, 12:43 PM
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If you have equity in your home, you should consider using it to pay down all kinds of debt, including credit card debt. The interest is fully deductable and usually much lower.
As for financing a car, equity line loans are probably somewhat higher than car loans now. The advantage may be minimal, based on one's tax bracket and other variables.
Another financing trick to having lower monthly payments is to set your payment so that in 24 or 36 months you have a balloon amount due that is no greater than the future trade-in value of the car. It requires an educated guess as to the future value, and you should be conservative or you will end up "upside-down". You will end up with no equity in your car, but that's not what cars are for!
There is also a type of loan called a "tax advantage" loan, where you use your home equity as collateral. The interest on this type of loan is also fully deductable. This type of loan generally does not require an appraisal, survey, points, or closing costs.
Done correctly, you can have the minimum monthly payment AND the minimum long term loan cost!!
As for financing a car, equity line loans are probably somewhat higher than car loans now. The advantage may be minimal, based on one's tax bracket and other variables.
Another financing trick to having lower monthly payments is to set your payment so that in 24 or 36 months you have a balloon amount due that is no greater than the future trade-in value of the car. It requires an educated guess as to the future value, and you should be conservative or you will end up "upside-down". You will end up with no equity in your car, but that's not what cars are for!
There is also a type of loan called a "tax advantage" loan, where you use your home equity as collateral. The interest on this type of loan is also fully deductable. This type of loan generally does not require an appraisal, survey, points, or closing costs.
Done correctly, you can have the minimum monthly payment AND the minimum long term loan cost!!
12-10-2001, 03:11 PM
#9
you can deduct the interest as long as the total line is less than $100k...
generally not a good idea to use long term debt (mortgage debt) for a short term purchase (something that lasts less than the term of the loan).
as long as you pay-off the line of credit in a reasonable period (by the time you sell the car), then it could make more sense than just taking the equity out every time you buy a car...
generally not a good idea to use long term debt (mortgage debt) for a short term purchase (something that lasts less than the term of the loan).
as long as you pay-off the line of credit in a reasonable period (by the time you sell the car), then it could make more sense than just taking the equity out every time you buy a car...
