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Auto Loans vs Home Equity Loans

Taking a home equity loan to purchase an automobile can be a great way to save money. There are two great reasons. First, home equity loans typically have lower interest rates than auto loans. Second, the interest on the home equity loan may be tax deductible.

So long as your home equity loan doesn't make your total home debt (meaning the sum of all of your current first mortgages and home equity loans) higher than the value of your home, you can deduct the first $100,000 of it no matter how you decide to use it. So home equity loans are tax-deductible to a point, whereas auto loans are not tax-deductible at all. Generally speaking, if you're a homeowner thinking about taking out a loan to finance a car, it's worth considering a home equity loan. Please consult your tax advisor for more details.

Try our auto equity loan calculator today and see what works for you!

Auto Loan vs. Home Equity Loan

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Auto Loan vs. Home Equity Loan Results

&NBSP; Auto Loan Home Equity Loan

Loan amount LOAN_AMOUNT HOME_EQUITY_LOAN_AMOUNT

Monthly payment MONTHLY_PAYMENT HOME_EQUITY_MONTHLY_PAYMENT

Interest rate INTEREST_RATE HOME_EQUITY_RATE

Term TERM months TERM months

Income tax savings
(Over the term of the loan) $0 HOME_EQUITY_TAX_SAVINGS

Total interest paid AUTO_LOAN_TOTAL_INTEREST HOME_EQUITY_TOTAL_INTEREST

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Auto Purchase Summary

Total purchase price (before tax): AUTO_SALE_PRICE

Sales tax*: SALES_TAX

&NBSP; *Currently California, the District of Columbia, Hawaii, Maryland and Michigan allow no deductions for trade-ins when calculating sales tax. If you live in one of these states make sure to check the box 'No sales tax deduction for trade-in' on the main calculator page.

Fees: TITLE_TRANSFER_FEE

Total sales price (after tax & fees): TOTAL_SALE_PRICE

Total downpayment**: TOTAL_DOWN

&NBSP; **Your total downpayment is calculated as your cash down payment of CASH_DOWN plus your trade-in allowance of TRADE_ALLOWANCE minus the AMOUNT_OWED_ON_TRADE loan balance outstanding on your trade-in vehicle.

Loan amount: LOAN_AMOUNT

Payment schedule

**REPEATING GROUP**

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Auto Equity Loan Calculator Definitions

Term - Number of months for the auto or home loan.
Purchase price - The amount, before taxes and fees, that you are paying for this auto.
Auto loan interest rate (APR) - Annual percentage rate for the auto loan.
Cash down - This is the money you have available to be used for fees and your down payment.
Trade allowance - Total dollar amount given to you for your auto trade-in.
Amount owed on trade - Total loan balance still outstanding on the trade-in.
Fees - Fee charged for title transfer. Also include any other fees that may be due at delivery.
Sales tax rate - Sales tax percentage rate charged on this purchase.
Home equity interest rate (APR) - Annual percentage rate for the home equity loan.
Home equity closing costs - Any additional costs to the home equity loan. This should include any appraiser fees, points paid or other miscellaneous fees.
State and Federal tax rates - Your state and federal marginal income tax rates. These rates are used to determine the tax savings associated with a home equity loan.
No sales tax deduction for trade-in - If you live in a state where your sales tax is calculated on your full purchase price, check this box. If this box is unchecked, sales tax is calculated on the purchase price less trade in. Currently California, the District of Columbia, Hawaii, Maryland, Michigan allow no deductions for trade-ins when calculating sales tax. In addition, Alaska, Delaware, Montana, New Hampshire, and Oregon have no sales tax on autos.