Home Equity Line of credit for new truck

[Pro-8250]

$.02

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?

No! It is a bad idea! That $145 is a interest payment only. Buy that truck for 35k and then the truck is worth 30-31k the day after. Is that a good idea????? Don't tie up your house (asset) with a truck.(liability)

 

[AMAX]

I bought new truck in my 20's. Work situation changed, family situation changed, etc, etc, etc. Ended up regretting it. It worked out, but I missed out on the ability to afford some other stuff and paying for that truck was like an anchor.

Now I'm older and financially in a way better place to buy new trucks, but I don't. I take my time searching for low mileage, well maintained used trucks. New trucks are great but they become used trucks pretty quick. The payoff on the loan doesn't match your used truck until quite a bit later.

 

[Dobber1]

I bought new truck in my 20's. Work situation changed, family situation changed, etc, etc, etc. Ended up regretting it. It worked out, but I missed out on the ability to afford some other stuff and paying for that truck was like an anchor.

Now I'm older and financially in a way better place to buy new trucks, but I don't. I take my time searching for low mileage, well maintained used trucks. New trucks are great but they become used trucks pretty quick. The payoff on the loan doesn't match your used truck until quite a bit later.

I ponder this quite often...(When is a new vehicle no longer new?)
After the first tank of gas or oil change?
After the first payment?
When you get the insurance premium notice?
When you pay for registration/plates?
After the first door ding or scratch?
After next year's model is available?
After the warrantee is up?
After the first set of tires?
When you hate making the payment?
When the new car smell is no longer noticeable?
IDK?

 

[Mafesto]

I ponder this quite often...(When is a new vehicle no longer new?)

The moment that you take possession.


Dealers use a term called ACV (Actual Cash Value)
If you HAD to liquidate the vehicle immediately, the most likely option would be selling it to a dealer. Most dealers would be happy to buy it from you for ACV. They will use auction reports to determine ACV.
So in a nutshell, your vehicle is worth whatever it would bring at wholesale auction.
Keep in mind that accessories add mere pennies on the dollar, if at all.


We were visiting about this at work yesterday, about just how STUPID it is to drive a nice vehicle when the roads are covered in a salty slop. And how stupid it is to have a nice vehicle and not use it. So the jist of it is that it is financially unwise to own a vehicle that you have to make payments on.

 

[Mafesto]

Having said all that, there is a value to be placed on....
1 - The good feeling of driving a nice vehicle. (admit it, we all enjoy it)
2 - The reliability factor that goes along with a newer vehicle.
3 - The safety features that newer vehicles have
4 - The luxury features that we have come to regard as necessities


I don't practice what I preach, I drive a newer & nicer vehicle than I really need, so yes I am among those STUPID people.

 

[Blk88GT]

Why not spend 5 or 10k on something more reliable than what you have? Why does it have to be new?

I bought my first house at 21 and I'm now 34. I sold that house 4 years ago and nearly tripled what I bought it for.

My daily driver is 12 years old. I commute 65 miles every day so reliability is important. Rather than a brand new pickup, I bought a Honda to keep my operating costs down. Yeah I'd love to be rolling in a new truck, but that's not realistic because I want to LIVE too.

It's easy to get caught up in the line of credit excitement but that's exactly what the bank wants you to do.

Don't put yourself in a position where you work just to make payments at ANY age.

 

[Pro-8250]

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?

HELOC is a variable rate, so that 2.75% is probably 3% now. If you want new, do your home work and shop around. The best time to buy would be December 26-31. There will be rebates and incentives up the tail pipe. In MN the best time to buy is in March and the end of December. Last March I bought a 2015 Ford Fusion (Made in USA). First new vehicle for me since 1999. Anyway I got several rebates one of which was going with Ford Motor Credit for a $500 rebate. The loan rate was 5% with a minimum term of 120 days. On the 121st day I paid it off with a 3 Year 1.9% fixed rate loan from my credit union. Check with your credit union about different financing options. $.02

 

[drummerdave]

My credit union has a 72 month vehicle loan for about 2.6% APR.
Your HELOC will be higher, puts you home on the hook, and while it seems cheaper, as was mentioned, its not.

I agree with what everybody else is saying.
Buy a used truck.

 

[Pro-8250]

My credit union has a 72 month vehicle loan for about 2.6% APR.
Your HELOC will be higher, puts you home on the hook, and while it seems cheaper, as was mentioned, its not.

I agree with what everybody else is saying.

Buy a used truck.

Amen brother!

 

[Dobber1]

Figured we'd have seen a pic of that new truck by now...?

 

[MORSNO]

Figured we'd have seen a pic of that new truck by now...?

I did too!

 

[89sandman]

Some words of advice that have served me well, "buy what you can afford, not what you want."

I would never use my home to buy anything. Might sound like a good idea at the time, but things and circumstances change. The one thing in your life that should always be secure is your home, the rest can come and go...

 

[milehighassassin]

I'm not going to read this entire thread but it's a horrible idea. It will essentially take you 30 years to pay off the truck and you will pay a boatload in interest. Interest rates are still low. Depending on your credit there is no reason you can't get a loan for say 2.49% at 60 months, or even 2.99 at 84 months. Either way, do the math on how much interest you will pay for 30 years at 2.75%.

Edit... I did the math for you. You'll pay $16,438.39 of interest if you pay for the standard 30 years. (2.75%)

If you pay for 15 years, you will pay $7,753.16 in interest.

That doesn't include the interest you pay for the house.

$300,000 home at 2.75% you will pay $66,455.68 of interest over 15 years, or $140,900.48 at 30 years.

Add the $35k to it and you pay $74,208.85 of interest for house and truck for 15 years or $157,338.86 for 30 years. That truck will cost you an additional $17,0000 for 30 years.

The ONLY good thing I can think of is you can write off your interest on a house but not on an auto loan, granted the penalty is more than the write off, so that really is not a benefit.

Interest on a $35k truck for 5 years at 2.99 is $2,724.92 stretch it out to 3.49 at 7 years and you pay $4,513.16

 

[njk4o5]

I think I wasn't explaining myself clearly enough. I don't plan on taking out $30k for a truck and then only paying $150/month for 10 years on it that would be retarted I would still owe like $27k or something on it.

I like the HELOC idea because it doesn't marry me to a $450/month payment. I can make that payment every month and money wouldn't be too tight but it would be nice to only be required to make $150 for say around xmas time when I have to buy a bunch of gifts and stuff. Basically every month I would throw $400 or so at the payment but then in December I would only pay my minimum.

Either way I don't plan on staying in my home too long maybe 2 more years max. its not really what I want in a house (tiny yard no garage). I bought it because its in a great town and it was a fixer upper that's pretty much all fixed up now. when I sell, I take what I made and pay off the rest of my truck HELOC loan.

Are you all driving 10 year old rust buckets or paying cash for your new F150s? I don't understand how you say taking out a car loan is a insane idea. Things up here start rusting in 5 years. I want a 15 f150 so the body wont rot out.

 

[black z]

Just do it if you want to and you realistically plan to pay it off in a timely manner. I love my 15 F150 3.5 Eco.

 

[polaris dude]

I think I wasn't explaining myself clearly enough. I don't plan on taking out $30k for a truck and then only paying $150/month for 10 years on it that would be retarted I would still owe like $27k or something on it.

I like the HELOC idea because it doesn't marry me to a $450/month payment. I can make that payment every month and money wouldn't be too tight but it would be nice to only be required to make $150 for say around xmas time when I have to buy a bunch of gifts and stuff. Basically every month I would throw $400 or so at the payment but then in December I would only pay my minimum.

Either way I don't plan on staying in my home too long maybe 2 more years max. its not really what I want in a house (tiny yard no garage). I bought it because its in a great town and it was a fixer upper that's pretty much all fixed up now. when I sell, I take what I made and pay off the rest of my truck HELOC loan.

Are you all driving 10 year old rust buckets or paying cash for your new F150s? I don't understand how you say taking out a car loan is a insane idea. Things up here start rusting in 5 years. I want a 15 f150 so the body wont rot out.

most people here are older and thus in a good financial place to buy cash or trade in and pay the difference. Nothing wrong with a loan if you pay it off in a decent amount of time. But like literally everyone has said if you are irresponsible and take forever to pay it if then it is more expensive to you in the long run. If you can't afford to make payments on it necessary to pay it off within 5 years general rule of thumb is to either wait to buy it or get something cheaper. Regardless you seem to have your mind made up so do what you will and hopefully home prices won't tank when you go to sell.

 

[Dobber1]

I did too!

 

[MORSNO]

No sense in going cheap at $50 a month.

 

[Mafesto]

As long as you're pawning your home to buy a F150, why not sell a kidney and move up to a F250 Powerstroke, hell, sell some sperm & upgrade to a King Ranch while you're at it!

 

[DDECKER]

As long as you're pawning your home to buy a F150, why not sell a kidney and move up to a F250 Powerstroke, hell, sell some sperm & upgrade to a King Ranch while you're at it!

How much is sperm worth now days? can it get me a new sled?