Home-equity credit line one way to finance car

Q. I need to buy a new car and was wondering what would be more beneficial: Getting a home-equity loan or home-equity line of credit for approximately $25,000 at the average going rate, use the money to buy a car and deduct the interest from taxes, or pay cash for the car. I do not have a mortgage on my house, so obtaining home equity should not be a problem.

-- Looking for tax breaks

A. Cash is often a better bet than borrowing money on which you'll pay interest.

But the best choice for you really depends on three factors, says certified financial planner Reed Fraasa of Highland Financial in Riverdale, N.J.: first, what you think the cost of borrowing will be over the next three years; second, what your tax bracket is; and third, what you can earn on a fixed-rate investment over the next three years.


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