Auto Loan vs. Home Equity Loan
Home equity loans generally often have lower interest rates than
auto loans and the interest may be tax deductible. Two good
reasons to take a look at home equity loans to finance your
automobile purchase.
Definitions
- Term
- Number of months for the auto loan.
- Purchase price
- The amount, before taxes and fees, that you are paying for this
auto.
- Auto loan interest rate
- Annual interest rate for the auto loan.
- Cash down
- This is the money you have available to be used for fees and
your down payment.
- Trade allowance
- Total dollar amount given to you for your auto trade-in.
- Amount owed on trade
- Total loan balance still outstanding on the trade-in.
- Fees
- Fee charged for title transfer. Also include any other fees
that may be due at delivery.
- Sales tax rate
- Sales tax percentage rate charged on this purchase.
- Home equity interest rate
- Annual interest rate for the home equity loan.
- Home equity closing costs
- Any additional costs to the home equity loan. This should
include any appraiser fees, points paid or other miscellaneous
fees.
- State and Federal tax rates
- Your state and federal marginal income tax rates. These rates
are used to determine the tax savings associated with a home equity
loan.
- No sales tax deduction for trade-in
- If you live in a state where your sales tax is calculated on
your full purchase price, check this box. If this box is unchecked,
sales tax is calculated on the purchase price less trade-in.
Currently California, the District of Columbia, Hawaii, Maryland
and Michigan allow no deductions for trade-ins when calculating
sales tax. In addition, Alaska, Delaware, Montana, New Hampshire
and Oregon have no sales tax on autos.
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