As a homeowner, you’re probably aware that home equity loans may be used to finance renovations, upgrades and other home improvements. But these low-interest loans are also a popular fixed-rate, tax-deductible financing option for vehicle purchases as well.

Comparing home equity loans and auto loans can help you determine which type of loan best meets your needs.

Home equity loans offer:

Fixed interest rates
Longer repayment schedules
One-time access to funds
Potential tax savings on interest paid
No prepayment penalty

Home equity lines of credit offer:

Variable interest rates
On-going access to funds
Potential tax savings on interest paid
Opportunities to fund recurring or unplanned expenses

Auto Loans offer:

Fixed interest rates
Shorter repayment schedules
One-time access to funds
Little to no additional tax benefits
No prepayment penalty
Lower risk (your car serves as collateral)

Comparing Home Equity Loans and Auto Loans

A home equity loan, like a traditional auto loan, is an installment loan with a fixed rate and fixed payments. Borrowers draw against the equity in their homes to obtain a fixed amount of money, which they’ll pay back over a fixed time period. Generally speaking, home equity loans and lines of credit carry lower interest rates than typical auto loans and can be repaid over a longer term.

Like home equity loans, traditional auto loans can be paid back ahead of schedule with no prepayment penalties. Our Home Equity vs. Auto Loan calculator can help you determine your monthly auto loan payment or auto purchase price.

Applying online for a BB&T home equity loan or line of credit is fast, easy and secure, and you’ll receive a decision in minutes. To apply for an auto loan, visit your local BB&T financial center. For additional information, call 888-BANK-BBT (800-226-5228), option 4.

Next: Home Equity Loan, Line of Credit or Refinance?