Home Equity Loan

is it better to make payments on a 6% car loan, or use an home equity line at 8.25%?

I just am trying to find out if its better to make payments on a 6% car loan at 210/month.. or use a home equity line at 8.25% which would be a little higher interest, but the interest would be a tax advantage to me. But im trying to see if anyone can tell me if the benefit of the tax write off would be larger then the 2.25% more i would be paying in interest...

Public Comments

1. It's a bad idea to shift a car loan to your home. If something happens you could lose your house. I seriously doubt if the tax write off will offset the additional interest. Not only is the rate higher, but how long will you take to pay it off?
2. Sounds like you are playing all kinds of games here to try to figure out how to save pennies. If you want to be smart, then save up and pay cash for the car. Why would you want to pay any interest if you are this concerned over the rate?
3. What's your tax rate? To figure out where 8.25% tax deductible is better, here is the calculation: 8.25 * x = 6 x=6/8.25 x = .73 So, a 27% drop in price takes you from 8.25 to 6. Therefore if your tax rate is higher that 27% then this would be a good idea. If its lower than 27%, then the lower rate is better. Still, even if this saves you a little money (as mentioned by someone else) its probably a bad idea as it puts the risk on a much more valuable asset (your home) and also once done you can't easily reverse this. ie Move all the money to a home equity line but then your tax rate goes down. To late, you can't move the money back to the car loan - its gone. So, I'd suggest against this even if it would save a little bit.
4. Pay the car payment. I understand the "tax" benefits, but you are risking your "equity", plus what if something does happen that you need that equity for. It is gone. Instead look at your current Taxes. Are you getting a huge return every year? If so adjust your deductions on your paycheck and take that "extra" monthly money and put it towards your car payment.
5. DO NOT RISK LOOSING YOUR HOUSE OVER A POSSIBLE TAX DEDUCTION. I know the bank tells you otherwise, but it is ALWAYS a BAD idea to pay off other types of loans with the equity in your home. If you loose your job or suddenly can't work (and you never know), you may loose your house. Use equity and other types of mortgage loans on your home only, no matter the tax benefit.
6. Depends on your tax bracket. The breakeven is 28% You'll want to check these guys out..... http://www.123thebest.info/go.php?link=auto See ya.