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Ask the Auto Loan Guru

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Contributed by: Dan Christopherson on 6/19/2008

ASK THE AUTO LOAN GURU
Column 6
by Kelly Eargle

Question: My wife and I are thinking about buying a new RV and financing it with an advance from our home equity line of credit instead of regular auto loan. All things being equal, with the home equity loan, I figure I will save money by having interest that's tax deductible rather than a regular vehicle loan that isn't. My wife doesn't like that approach. She hates to use our home equity line. (We've only used it so far to finance our daughter's education.) What's your opinion? - Ben W.

Answer: You could be right to utilize your home equity line. You could be wrong. What people tend to overlook in tapping their home equity revolving credit lines is that, unlike a fixed-term vehicle loan that, say, will be paid off in five years, with a revolving line of credit, depending on your payment strategy and level of self-discipline, you could be paying interest on that purchase for a lot longer than five years, adding to your overall interest expense and possibly negating the advantage of tax-deductible interest.

Kelly Eargle is an auto financing expert with the Credit Union of Colorado, which has a local branch in Arvada at 8770 Wadsworth Blvd. Email your question to EargleK@cuofco.org. Not all questions will result in publication.

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CONTRIBUTOR INFORMATION

Dan Christopherson

Greenwood Village , CO

Dan Christopherson has posted 10 stories and 4 comments since joining on 8/24/2007. Dan Christopherson 's average story rating is 5.

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