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Auto Loan vs. Home Equity Loan
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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
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- 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)
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Annual percentage rate for the home equity loan.
- Home equity closing costs
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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.
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Information and interactive calculators are made available
to you as self-help tools for your independent use and are not intended to provide
investment advice. We can not and do not guarantee their applicability or accuracy
in regards to your individual circumstances. All examples are hypothetical and are
for illustrative purposes. We encourage you to seek personalized advice from qualified
professionals regarding all personal finance issues.
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