Consumers Digest

can you buy a car and finance it with a home improvement loan so you can write it off?

Public Comments

1. YES you can. Many do it
2. If you are speaking of the Home Equity Loan or HELOC, yes you can buy a car, pay off the high interest credit card balance, and even take a vacation. Beware, many banks only tell you about the minimum you need to pay--which is only interest. After awhile, if you have not paid any principle down, and the term (normally 10 years) expires, they expect a balloon payment in full, or they take your house, so make sure you are paying principle too. The interest you pay on a yearly basis is a tax deduction on you Schedule A of the Form 1040.
3. I always use my HELOC to buy cars it is cheaper interest and deductible and interest only payments for the first few year. I spent over 20K on one in December at 2.24% interest only after taxes is about 2% so only about 50 a month minimum payment. One thing you must be aware of is that the interest rate will change so even when low it will probably go up. You do still have to pay off the debt and when you don't have a high minimum payment some wouldn't do it or pay more than they should for a car.