Why would anyone take money out of an asset that appreciates to finance a liability that depreciates? If you can't afford to pay for the car outright, it's probably out of your price range! A Ford Focus can get you to the grocery store just as quickly as the H3 Hummer and uses less fuel. Is an H3 Hummer really worth the possibility of foreclosure? I don't understand how these people get through life the way they handle money.
2007-09-10 05:13:39 · 8 answers · asked by trer 3 in Business & Finance ➔ Personal Finance
I don't disagree with you, but in some cases it can make sense. If the person can't get an attractive rate on a car loan, and there's the ability to get a small home equity loan at 7.5% (tax deductible, also!), that might be the best option. And using some of the equity if that's the best option to get cash is not going to affect any appreciation of the home.
However, for the vast majority of people, it's not the smart thing to do. You think using home equity to buy a car is stupid... what about the people who took out hundreds of thousands to spend on vacations and luxury goods? They have almost NOTHING to show for it. And with home prices deteriorating, many people have squandered all the equity they had from a few years of rampant appreciation.
2007-09-10 05:22:06 · answer #1 · answered by likepepsi 7 · 0⤊ 0⤋
Most people want to compete with the neighbors. The neighbors got a new Hummer, so I need a new Hummer attitude is getting scarey. I think this country, America, is getting to a point where greed and wanting everything is going to hurt us. A person can just look at housing going down in value and it scares a person.
2007-09-10 05:25:40 · answer #2 · answered by david d 5 · 0⤊ 0⤋
I agree with you, it doesn't make sense, and I wouldn't do it.
But interest on a HELOC can be tax-deductible under most circumstances, even if it's used for something other than home improvements, so possibly they're doing it that way for the tax deduction. At least I hope so - it they're doing it because that's the only way to get a shiny new car, then I don't want to hear any whining if their home is foreclosed on.
2007-09-10 06:04:31 · answer #3 · answered by Judy 7 · 1⤊ 0⤋
It is totally stupid and if the government didn't take money from people like us that made good decisions ....and use it to support these fools, they would starve in the streets during retirement.
2007-09-10 05:21:37 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Beyond crazy, its the changing values of many americans. "I want it now attitude" its what many advisors have been pushing which is the education of money in the school systems which I totally agree with
2007-09-10 05:21:32 · answer #5 · answered by prodigychild_21 4 · 0⤊ 0⤋
But if you borrow from yourself thats better then racking up debt to someone else.
If I had a 401K that had a loan option I'd build up a huge balance then borrow from it whenever I needed money because I'd just be paying myself back...
2007-09-10 05:19:19 · answer #6 · answered by Joseph T 4 · 0⤊ 2⤋
The government will bail them out at expence of other taxpayers.
It always does.
2007-09-10 05:21:56 · answer #7 · answered by Alexander 6 · 0⤊ 0⤋
I would not do it.
2007-09-10 05:22:43 · answer #8 · answered by Anonymous · 0⤊ 0⤋