Buying a car? Compare HELOC to auto loan
Dear Driving for Dollars,
I am just graduating from college and want to buy a car. I bought a house with cash about two months ago. The house costs more than twice than the car I want. Should I use a home equity line of credit to make my purchase or an auto loan? I have good credit and make payments on time.
It sounds like you are doing terrific financially at a young age. Congratulations! Since you have good credit, you have lots of options. Even so, the national average for a home equity line of credit, or HELOC, was about 1 percent lower than an auto loan. So assuming the terms are the same and the auto manufacturer isn’t offering low interest loans for the car you want, a HELOC may be your best bet. To be sure, compare the interest rates for the HELOC as well as the auto loan rates at Bankrate.com, or your local credit union, bank and the auto manufacturer’s lender. And you can utilize Bankrate’s Car Loan Rate Comparison Calculator to determine your best option.