We are buying a used truck from my father in law who is too ill to drive anymore (we are getting a heck of a deal on it). We plan to pay off the loan when we sell our house, within the next year. We wonder if the tax write off of the equity line offsets the higher interest charge. With regards to the $75 charge to use the credit card check, how does that change the real apr and what is the math you used to figure it out?
2006-08-16 14:03:07 · 3 answers · asked by babyboymason2003 1 in Business & Finance ➔ Other - Business & Finance
3.99% on $10,000 for one year is......wait for it.....$399.....plus $75 = $474 or 4.74% for the year (close enough, actually the $75 upfront technically raises the apr a little).....but is the 3.99 fixed? or a teaser rate for 6 months? then prime plus 7%??? or 16%...the 9% equity loan offers deducibility, if you can use it...probably can.....and if you can effectively get 20% back = deduct 1.8% for a real cost of 7.2%.....the devil's in the details on either loan...also relevant is whether you have an old heloc.....a new one may have a prepayment penalty, which may kick in when you sell your house
2006-08-16 14:18:21 · answer #1 · answered by scott n 2 · 0⤊ 0⤋
One thing you want to watch with those credit card checks is that if you are late with a single payment, your interest rate may go up to a horrific number. Read the fine print.
On the other hand, the danger with the home equity credit lines is that it is all too tempting never to pay them off, and then get into trouble with credit cards on top of that.
2006-08-16 14:12:00 · answer #2 · answered by rollo_tomassi423 6 · 0⤊ 0⤋
If you are absolutely sure you are going to pay it off next year, use the equity line. Not so much for tax write offs, but for a good credit rating when it's paid. But, alot can happen in a year.
2006-08-16 14:16:47 · answer #3 · answered by Pancakes 7 · 0⤊ 0⤋