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Question for the Money Doctors

Question submitted on Feb 15, 2011.

Question

My car loan rate is 7.50% My line of credit rate is 4.91 %(! I owe 11,000 on the vehicle , should I pay the vehicle off with the line of credit ?

Answer

If the rate on the Line of Credit is Adjustable or collateralized by your home, I would not use it to pay off your car.  Otherwise, you may be risking a higher interest payments if interest rates go up losing your house if you default on the loan.


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