Auto loan or home equity loan?

[Scanner]

We will need a minivan here shortly. I am considering the Dodge Caravan, as we could get all we need for about $17,000-18,000.

I could be talked into used. . .but it may be hard to find one with low miles. Considering my wife only put 30,000 miles on her Matrix so far in about 3.5 years. . .we'd be set on cars for a long time ( I would "inherit" the Matrix).

My question is, if you were to finance a car, would you use a HELOC or an auto loan?

The advantage of a HELOC is that the interest is deductible. The disadvantage is your house is used as collateral.

I guess the advantage of an auto loan is that only the car is used as collateral but I would guess interest is higher.

I may be able to get the whole thing with just cash and carry but I would be cutting it close - it would entirely wipe out emergency savings to just hand a check over.

My thought is to put 50% down and finance 50% and maybe pay an extra $50/month.

Regardless, I will probably secure financing outside of the dealership.

[all4money]

First off, I used to own a Caravan... HATED it. It had problems from the get-go. I own a Sienna now and LOVE it. Not one problem. Just a suggestion that Toyota quality really does surpass Dodge and it might be beneficial to look for a pre-owned Sienna... we got our 2003 Sienna with reasonably low mileage in July 2005 for $16k. Just sharing my experiences...

As to your question, do you already have the HELOC line set up? If so, it might be ok to use it (knowing your attitude toward money, savings, debt, etc). But, for the regular population though, I'd have to vote for the typical auto loan. Most people aren't disciplined enough to use the HELOC to their fullest advantage and so to be safe, I'd vote for the auto loan for those folks so as their homes aren't on the line... but for you, I think you do have an option in this situation. My gut would still be to do the auto loan though.

Good luck in your search!

[Scanner]

My father owns a Sienna and I have thought about it.

The question is - do I go with a Sienna with 36,000 miles on it when I get can a brand new Caravan?

I like Toyotas - after all, I own one. I just am not sure it's worth an extra $5000-8000 to own one.

[disneysteve]

First off, I used to own a Caravan... HATED it. It had problems from the get-go. I own a Sienna now and LOVE it.

I could have written the same thing. We owned a Caravan. It was the subject of 3 or 4 recalls while we owned it. When it was 4 years old, it burst into flames in our driveway. Thankfully, nobody was injured and it wasn't parked in our garage at the time or we would have lost our house. When the engineering team came out to inspect the wreckage, they took one look at it and said they knew the problem as they had seen it before. To date, there has still never been a recall or any safety warnings for the problem that caused the fire. We will not purchase another Chrysler vehicle.

We are on our 2nd Sienna, both 2000 model year. The first one was wrecked in an accident and we replaced it in Sept. 2002 with a nearly identical one. It just turned 100,000 miles last week and has been trouble-free. ETA: We bought it with 34,000 miles.

As for financing, I think a Home Equity Loan is a perfectly good idea for a responsible individual. Check out what kind of auto loan you can get and compare that to the HEL rates. Take whichever is better. I bought my current car with a HEL in 1998. We paid cash for the Sienna (along with the insurance settlement check).

[Scanner]

Okay, I'll scratch the Caravan.

[LivingAlmostLarge]

What caused the flames? And dealer financing can be a great deal. DH got 0% and the car in the ad (the one car meant to draw people in).

[PauletteGoddard]

How much are auto loans going for these days?

I was thinking about borrowing from my personal line of credit for a car, as the PLC rate was at 8.4% when I checked last night; however, I was remembering my first auto purchase in the U.S. Being a new arrival with a short credit history I got 9.15% from auto financing because I made my purchase after hours.

[disneysteve]

What caused the flames?

Apparently, there was an issue with the grounding of the fuel tank filler pipe (where you put the gas in). Static electricity would build up and ignite the gas fumes. It wasn't pretty to watch. Did a fair amount of property damage - melted the asphalt on the driveway, wrecked the garage door when the tank exploded and shrapnel punctured the door, burned a patch of lawn, the basketball backboard, a tree, the light post, etc.

[jodi]

Oooh, my parents have owned two Caravans and swear by them. That story makes me a but nervous though. I have a Ford Windstar (2000) and HATE it, but it's paid for, so I'm stuck for a few more years.
If you're buying new, I would be on the lookout for any 0% deals. With our last car loan (used), I checked out our credit union and the dealership - they were the same (I think it was around 3.75%), so we went with the dealership for the sake of simplicity. And paid it off two years early, of course

[nanook124]

Funny how we all have had different experiences....
We bought a 95 Dodge Caravan new. Drove it to Alaska (from Michigan), it survived 3 COLD winters in Alaska, we drove it back to Michigan and kept it until 2003. Never had a major problem with it and loved it.

Bought a 2001 Chrysler Town & Country in 03. It's been a great vehicle- especially on drives to FL, TN and the U.P. of Michigan. Now I am looking to sell it (85k miles). Just sick of driving a van.

I would consider using the HELOC for a used vehicle, but not a new one. I guess it just seems like too much money 'risk'.

[LivingAlmostLarge]

I thought if a HELOC is used for other purposes than home improvement it is NOT tax deductible.

[InDebtInDC]

I thought if a HELOC is used for other purposes than home improvement it is NOT tax deductible.

You may want to check with your tax advisor, but apparently you may use it for any purpose.

I also favour the Toyota. Get a Caravan if you must. After all, I do own a Dodge, but I really despise the Ford. I really really hate working on Fords, but your mechanic will love you because simple jobs on any other car turns out to be big money for the Ford.

[Scanner]

I was going to ask what year disneysteve had his caravan explode since he's owned 3 cars since then. I can put up with some minor repairs - in fact, I'd rather have $1000 in minor repairs over 7 years then paying more interest on teh financing, just to say I own a Toyota or Honda.

I'm even an extended warranty kind of guy.

[disneysteve]

Scanner - Our self-combusting van was a 1996 and the fire was in 2000. Without giving incriminating details, the engineers said that the problem was known and they had seen it before, so ours wasn't a fluke. To be fair, the Caravan has undergone a couple of redesigns since then and hopefully they've corrected that flaw. Honestly, there are features of the Caravan that we liked better than the Sienna, but I still think the Sienna is the better quality vehicle.

[MonkeyMama]

My review of the Caravan is mixed. I think they have gotten much better. Got off of glowing recommendations.

On one hand.

On the other hand, 2 of my last cars were OLD - I bought them for $1k. They were Toyota/Saturn and drove them for 10 years combined. Hardly a problem. Hardly even a repair.

2-year-old Caravan - the door locks stopped working and it was a $1k repair (1st year). The windows work intermittently. This was s'posed to be a major upgrade in car, and thus far I am not pleased. I have never had repair bills like this on a car.

My Saturn was all power and never had any problems like this. Though I admit my first car was all manual.

I would take my $1k Toyota or Saturn any day.

Toyota Sienna - yes, I would buy used in a heartbeat. My 2 cents. Toyota is just such better quality, in every way, shape and form.

As far as how to pay, I'd go by lower interest rates. (considering tax savings on HELOC). If it is under $100k, it is tax deductible. But not for AMT (unless used for home improvement). Probably what you are thinking of, LAL.