Thrivent Financial Bank

Auto Loan vs. Home Equity Loan

Home equity loans 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.

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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 (APR): Annual percentage 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 (APR): Annual percentage 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, 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.

These interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide specific financial advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical, are for illustrative purposes only, are not guaranteed, and may differ from a more in depth analysis. You are encouraged to seek personalized analysis and/or advice from a qualified professional regarding all personal finance issues.