Home Equity vs. Auto Loan

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Home Equity vs. Auto Loan

Which is cheaper for financing a car — an auto loan, or a home equity loan with potentially deductible interest?

Purchase

Amount financed ($)

Home equity loan

HE rate (%)

HE term (years)

Auto loan

Auto rate (%)

Auto term (years)

Tax

Marginal tax rate (%)

Results

Better option

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Home equity — monthly pmt

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Home equity — total cost

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Home equity — after-tax cost

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Auto loan — monthly pmt

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Auto loan — total cost

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HELOC interest is only deductible when used to buy, build, or substantially improve the home securing the loan — using it to buy a car usually isn't deductible. Check with a tax advisor.