Home Equity Car Loans

Home equity loans and lines of credit are becoming increasingly popular among homeowners looking for a mid-size loan. But are these loans right for an auto purchase?

This page:

  • Weighs the pros and cons of a home equity auto loan

  • Helps you decide if a home equity car loan is right for you

  • Links to our home equity loan guide for more info.

Home equity loans seem all the rage these days. And with their low rates and flexible terms, what's not to love? Let's take a look.

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How home equity loans work

A home equity loan is simply a "line of credit" that uses your home as collateral. Usually its size is limited to the amount of home you actually own, although this shouldn't be a factor on a home equity car loan.

Home equity loans carry lower interest rates and longer terms than you're likely to find on an auto loan. And that translates into lower monthly payments.

Of course, the rates are low because the lender's investment is protected, namely by your house, and that can be a little risky for you. Is it worth the trade-off?

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If you are seriously considering using a home equity loan to finance your car purchase, then Lending Tree is the place to go. They have super-low home equity rates, and are experts in helping consumers come up with a loan package to meet your needs. Visit Lending Tree's home equity center now, and get a quick loan quote.

Is a home equity auto loan is right for you?

And the verdict is . . . probably not. Despite all their advantages, home equity loans just aren't right for some jobs. And financing your car is one of those jobs.

Your home is probably the biggest investment you have, and taking money out of an investment to finance a luxury purchase just isn't a good idea.

Cars, no matter what the dealer says, aren't investments. They're expenses. Investments appreciate (or, at least, they're supposed to). Cars always lose value. And putting your home ownership (no matter how secure you feel borrowing against it) on the line for an expense just doesn't make good financial sense.

And, risk aside, the numbers on a home equity car loan may work against you. The reason the monthly payments are so small on an home equity loan is because the loan term is so long (generally 10 or 15 years.) And that means a big interest bill.

All things considered you're probably better off with a traditional auto loan. The car loans offered by our recommended lenders feature low rates, no down payment, and flexible loan amounts. You'll get a good deal without having to put your house on the line.

Read more about traditional low-rate auto loans from Capital One and RoadLoans before making up your mind.

Or visit Lending Tree's home equity center to learn more about their low-rate home equity loans.

More help

If you're still set financing your car with your house, there are still a few things you can do to minimize the risk on a home equity car loan.

For example, opt for a home equity loan over a line of credit. They're safer and easier to pay off.

Also, familiarize yourself with the tax advantages of deducting home loan interest.

For more information on home equity products, visit our home equity website.

Learn how to save even more:

Sign up fo our free auto financing email course. You'll learn the step-by-step process that will help you save hundreds, even thousands of dollars on financing costs. And it's free!

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