Suze Orman discusses this question in a recent article in Oprah Magazine, with tax season approaching this question is on many family’s minds. With the benefit of deducting the HELOC interest during tax season, is it worth taking out a car loan against your house?
“You should NEVER use a home equity line of credit for a car loan”. Suze Orman also mentions entering into a loan against your house will add your house to your collateral. If you become a few months behind on payments you risk losing the roof over your head, which is a much bigger loss than a possible repossession.
Her strategy for buying a new car is to look at the vehicle as an asset and factor in depreciation and interest. Buying a gently used car avoids the steep depreciation car buyers will experience in the first few years. This also allows a lower buying price and overall decreasing the interest on your loan. Suze Orman also suggests not taking out a loan longer than 36 months, the longer time period for the loan the more interest you will end up paying in the end. Read the full story here!
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