Dear Driving for Dollars,
I have two, 2007 model-year cars that I owe a total $18,000 on, with loans that are at 6.2 percent. Should I transfer the debt over to my adjustable home equity line of credit at 2.99 percent? We plan to have it paid off in two years, but I’m worried about the adjustable rate.
I understand why you are worried. It’s hard to know whether you will pay more in the long run than you would with the fixed car loan when you don’t know how much your adjustable rate will increase. To see the trends with home equity lines of credit, or HELOC, check out the graph rate trends analysis tool and select the HELOC you have. Your safest bet financially is to make larger monthly payments on your current loans to pay down the principals, which effectively reduces the interest rates. Bankrate.com’s early payoff calculator will help you make the calculations.