aweix[at]yahoo.com wrote:

- quote -

Leaving the 25K in the car loan will cost you about $1700.
Putting the loan in the HEL will cost $5800, save $1600 in taxes while
your investment would earn you $1100 and cost $300 in taxes for the next
3.25 years, for a net cost of $3400. :-(

Putting that $4000 into the car loan will save you about $300 over the
life of the loan. Investing it in something that earns 10% will make you
$1400 - $390 taxes is about $1000 or a net $600 improvement...

So I'd say don't put the $4000 into the car loan or take out the HEL.
Invest the $4000 in your 10% mutual fund and keep making the 690/mo
payments. This will only make you an average of less than $200 per year
though after taxes... If your time is worth $20/hr and you spent more
than 6 minutes thinking about this, you ended up with a loss.

Someone check me on these numbers, I'm new at this.

aweix[at]yahoo.com wrote:

- quote -

This is a risky strategy. No mutual fund guarantees 10-12%. You are also
lengthening your loan to longer than the probable life of the truck.

A more conservative approach would be to continue your current loan. When it
pays off in 3.5 years, start putting the loan payment in a savings account. When
your truck dies, you should be able to pay cash for the replacement.

-- Doug

You'll do yourself harm by extending the loan term out. If you have
3.5 years left on the vehicle loan, you need to calculate the payment
on the home equity line with a 3.5 year repayment. Your current HELOC
scheme will cost less evey month, but you'll be paying an additional
6.5 years.

We have a truck loan at $29,000 at 3.9%, payment about $690/mo. I was
thinking about transferring that debt to a fixed rate 8% home equity
loan for 10 years after paying it down to $25,000. That would make my
payment about $305/mo. Then I could use the freed up $385 to invest in
a mutual fund at a higher rate of return, say 10% - 12%. I think this
will be good for us as we will be making more money on that $385/mo
than we were paying in interest on it with the original loan. The
interest on the home equity loan will be tax deductible too, so that
reduces the effective interest rate on that loan right? Original loan
has 3.5 years left on it. I think I'm in a 28% tax bracket too if that
is needed. Can someone confirm or tear down this thought for me?