Home Equity Line of credit for new truck

[njk4o5]

Hey guys im looking for a little advice, anyone ever used the equity in their home to finance a vehicle?

My old Silverado has been very unreliable and rusty with 190k on her. I cant be coming late to work or missing days this winter due to my vehicle not getting me there.

Im 25, bought my first house a little over a year ago and re did a lot on the inside, it appraised at $140k more than I owe on it. So I was thinking of taking a home equity line of credit out to finance a new truck to make the monthly payments lower.

Looking at a new $35k F150, home equity line with a 2.75% rate from my credit union is ~$145/month minimum payment. Now I could most likely pay over double the minimum every month, but just in case money got tight it would be nice having the low required monthly payment. Car payment for 60months on that same truck would be $500ish/month.

Does it sound like a good idea?

 

[POLZIN]

I like HELOCs for the fact that its low interest and the interest is often tax deductible. Just don't be an idiot and go buy junk with the $ and you'll be fine. A vehicle is one of the few things I would advocate using such means to purchase.

 

[Mafesto]

Looking at a new $35k F150, home equity line with a 2.75% rate from my credit union is ~$145/month minimum payment. Now I could most likely pay over double the minimum every month, but just in case money got tight it would be nice having the low required monthly payment. Car payment for 60months on that same truck would be $500ish/month.

Couple of things,
We've done 3 HELOCs, and they were 5 year terms.
The first one really snuck up on us, and getting a letter in the mail telling us a final payment (in the $20,000 range) is due is an unpleasant surprise.
This naturally led to our 2nd HELOC, essentially extending the 1st one.
This is usually not a problem, but if you fall on hard times and you credit score slips this option may not be available.
Bottom line is realizing that you are putting your home on the line.


Next, let's say you get an auto loan for 6 years at 3.9%
You are locked in at 3.9% and it will not go up.
Not the case with a HELOC. These rates follow the prime and are subject to the potential volatility of the banking climate.


I will not advise one way or another as I have no idea about any of your personal or financial details. But happy to answer any questions that I am able to.

 

[polaris dude]

Bottom line if you will have the means to pay it off, but prefer not to stress your savings account, it can be solid assuming like Mafesto said the interest rate remains low. Obviously the bad side is that if something happens and you can't pay it off your gonna have to start selling assets asap or the house is gone.

Only question I have is if you are sitting good financially why can't you make the $500/monthly? Do you really want to be paying for your truck longer than 5 years?? assuming you do make 2x the minimum that is over 8 years of payments... Perhaps wait and accumulate a larger down payment unless you'd rather trade in your current truck before a critical failure occurs.

 

[Mafesto]

My old Silverado has been very unreliable and rusty with 190k on her. I cant be coming late to work or missing days this winter due to my vehicle not getting me there.

That is very smart.
I worked with a guy one winter that could have easily made vehicle payments from getting back the time he lost due to driving a piece of crap.

 

[njk4o5]

Bottom line if you will have the means to pay it off, but prefer not to stress your savings account, it can be solid assuming like Mafesto said the interest rate remains low. Obviously the bad side is that if something happens and you can't pay it off your gonna have to start selling assets asap or the house is gone.

Only question I have is if you are sitting good financially why can't you make the $500/monthly? Do you really want to be paying for your truck longer than 5 years?? assuming you do make 2x the minimum that is over 8 years of payments... Perhaps wait and accumulate a larger down payment unless you'd rather trade in your current truck before a critical failure occurs.

I just don't want to be married to a $400-500/month payment. it wouldn't leave me with much money.

im thinking of paying it for 5 years and then it will probably be time to move into another vehicle, so I sell the truck and pay off remaining debt.

 

[Mafesto]

I just don't want to be married to a $400-500/month payment. it wouldn't leave me with much money.

Then you should be looking at a less expensive alternative.


Don't fool yourself into thinking that buying a new pickup will magically strengthen your financial situation when you know it will have the opposite affect,

 

[bobback]

Are there any closing costs...appraisal, title insurance, etc. sometimes there are and sometimes not.

Early payoff fee?

And yes interest is potentially a write off depending on numerous other things.

 

[Dobber1]

Hey guys im looking for a little advice, anyone ever used the equity in their home to finance a vehicle?

My old Silverado has been very unreliable and rusty with 190k on her. I cant be coming late to work or missing days this winter due to my vehicle not getting me there.

Does it sound like a good idea?

NO!

 

[njk4o5]

NO!

so do I save up $30k cash and then buy a truck? I should have that by year 2026

 

[Dobber1]

so do I save up $30k cash and then buy a truck? Yes
I should have that by year 2026 Perfect!

Simply put, you can't afford it.
Dave Ramsey

 

[Mafesto]

We aren't trying to be mean, we are giving you good advice based on experience.

 

[MORSNO]

At 26 with a new house, you do not NEED a new truck. Listen to those who are older and "been there, done that" who are trying to help you. Heck, my daily driver is a 152,000+ mile beater with a heater, even though I could afford to buy a new daily driver, why when this one works just fine.

 

[rmk8000]

I would look for a low mileage used truck if I were you. I drive a 1997 dodge 12 valve with over 500000 hard kms being used in the oil patch and as a farm truck and don't think I have missed or been late for work ever because of it. My friends brand new 1/2 ton has spent a lot more time in the shop than mine has.
Honestly, buy a good used truck then set aside a bit of money every month until you can afford to trade it I on a new one. Not having debt is a way better feeling than driving a new truck.

 

[Dobber1]

At 26 with a new house, you do not NEED a new truck. Listen to those who are older and "been there, done that" who are trying to help you. Heck, my daily driver is a 152,000+ mile beater with a heater, even though I could afford to buy a new daily driver, why when this one works just fine.

Ha! I've got ya by a couple hundred thousand...

 

[MORSNO]

Ha! I've got ya by a couple hundred thousand...

See, older and wiser!

 

[go high fast]

Spending $30,000 on a depreciating asset is unwise. Borrowing money to do so is insane.

 

[Mafesto]

Spending $30,000 on a depreciating asset is unwise. Borrowing money to do so is insane.

Great advice. I wish I could say I have followed that advice!
If I would have, I could easily write a check for a new King Ranch diesel!
Unfortunately, I have spent far too much on interest & depreciation on vehicles and toys.

 

[Joe Nobody]

I will share the advice my uncle gave me when I was 20 years old; "work as hard as you can and dont be tempted to buy shiny new things like all of your friends do. Keep that up until your 40 years old and then you'll be in better position to actually afford those shiny things. Ya gotta work hard for many years to get where you want to end up in life kid. Dont dive into Wordly things like everyone else does". That mindset has served me well. Be nice to your ol' truck.... She'll get you there and back

 

[HeadLever]

I just don't want to be married to a $400-500/month payment. it wouldn't leave me with much money.

im thinking of paying it for 5 years and then it will probably be time to move into another vehicle, so I sell the truck and pay off remaining debt.

Be very careful here. I you are paying ~$100 buck on principal for 5 years, you have paid the loan principal down from $35K to about $29,000 (assuming no down payment). In 5 years, that 35K truck is going to be worth about $15 to $20 thousand. You are not going to be able to sell this truck to pay off the remaining loan. In fact, you are going to have to pony up 10 to 15 thousand just to get back to par.

Bad Idea. Capital "B" Bad.