For many Americans, a car is more than just a mode of transportation—it’s a symbol of freedom, independence, and even success.
From road trips to daily commutes, having a reliable vehicle is essential in our personal lives and careers.
However, cars—good, reliable ones, at least—are not cheap, and we frequently need easy financing to make them happen.
HELOC financing options for cars
While traditional auto loans are common, homeowners have another financing option that can be both flexible and cost-effective: a Home Equity Line of Credit (HELOC).
In this article, we’ll explore how a HELOC can be used as an easy financing option for your car, why a car might be a fundamental purchase for your life, and how a HELOC financing option could be the right choice for your next vehicle purchase.
Why cars are central to American life
From the moment we get our driver’s license, owning a car is often seen as a rite of passage—a sign of independence and freedom.
Mass public transportation is limited in many areas, making cars not just a luxury but a vital necessity for getting to work, running errands, and staying connected with family and friends.
The average cost of a car in the United States
The cost of purchasing a vehicle may vary widely based on the type of car, make, model, and whether it’s new or used.
According to recent data, the average cost of a new car in the U.S. is around $48,000. Used cars typically average about $26,000. These prices can increase significantly for luxury models or vehicles with advanced features.
Additionally, the cost of ownership doesn’t end at the purchase price—maintenance, insurance, and fuel add to the overall expense of owning a car.
For many buyers, the upfront cost of a vehicle can be a barrier, especially if they are looking for a high-quality or reliable car that may be priced above their immediate budget.
This is where financing options, such as auto loans, can provide funding solutions. But, for homeowners, there could be an easy alternative to car financing they haven’t considered.
How a HELOC can help with your car purchase
A Home Equity Line of Credit (HELOC) may be an excellent financing option for homeowners like you who are looking to purchase a car.
By leveraging the equity you’ve built in your home, you can access funds to make a major purchase, like a vehicle, without depleting your savings.
A HELOC is a revolving line of credit that gives you flexibility in how much you borrow and when.
This makes it a convenient choice for car buyers who may want to finance the purchase without taking out a traditional auto loan.
Benefits of using a HELOC for car purchase
- Lower interest rates: Compared to most traditional auto loans or personal loans, HELOCs typically feature lower interest rates because your home secures them
- Flexibility: Borrow exactly the amount you need, whether it’s to cover the full cost of the car or just a portion of it—you can continue to borrow against it as needed, even after your initial car purchase.
- Interest-only payments in draw period: Typically, the first 5 to 10 years are the draw period where many lenders allow for interest-only payments—keeping monthly payments low in the initial years, making it easier to manage other expenses while still owning a reliable vehicle
- Extended repayment terms: Compared to traditional auto loan repayment periods of 3 to 7 years, HELOC repayment periods can extend up to 20 years, giving you more time to pay off the balance.
How to use a HELOC responsibly for a car purchase
While using a HELOC for a car purchase offers many advantages, using this financing responsibly is important.
Because a HELOC is secured by your home, failing to make payments could put your home at risk.
To ensure you’re making a sound financial decision, consider the following tips:
- The affordability calculation: Assess your financial situation, then set a realistic budget for your car purchase, including the cost of the vehicle but also related ongoing expenses such as:
- Insurance
- Maintenance
- Fuel
- Borrow only what you need: While a HELOC provides flexibility, borrowing more than you need can lead to unnecessary debt and higher monthly payments.
- Repayment plan: Consider your long-term financial goals and how your HELOC payments will fit into your overall budget.
- Keep your home equity in mind: Using a HELOC for a car purchase means tapping into your home’s equity, which could limit your ability to borrow for other purposes in the future.
HELOCs for easy car financing with HomeEQ
A reliable car is essential for personal and professional success in American life.
Whether you need a vehicle for your daily commute, family responsibilities, or simply to enjoy the freedom of the open road, a car is a major investment.
A HELOC makes financing a car purchase easy and affordable for homeowners, with lower interest rates, flexible borrowing, and longer repayment terms.
Get behind the wheel with HomeEQ
Check out HomeEQ’s fast and fully digital application for easy car financing.
In minutes, you can find out if you’re eligible for a HELOC and solve your financing problem.
Explore your options with a HELOC and drive away in the car you need while staying in control of your finances.