Home Equity Loan to purchase Truck

[Matt Rubel]

I have three rentals which I've owned for the last 12 years.  I was able to buy them cheap and build a lot of equity which I currently gross $4,600/month and my current net is $2,800 after insurance/tax/mortgage/utilities... I now have a three kids under the age of 3 and both my wife and I have demanding full time careers so I do not see myself purchasing anymore rentals in the current market.  My question is: Do I purchase a truck with the equity that I currently have in one of my rentals?  Would this help save me money on interest?  Truck interest rates are 3% and home equity are at 3.25.  Thoughts?  

[Nathan Gesner]

Matt, I'll start by sharing an objective article regarding the use of equity to purchase a vehicle:

https://www.bankrate.com/home-...

I assume you're talking about a new truck. The vehicle loses a ton of value in the first 3-5 years. If you really need one, why not buy a good used one?

Do you really need a truck? You have five people to transport so even a large truck will be at max capacity. What if one of your kids wants to bring friends? What if you have a 4th child? How often will you really use the truck bed? Couldn't you buy an SUV and tow a $600 trailer for the rare occasion that you need to haul stuff around?

How does financing even fit into your goals? Wouldn't you better serve yourself, your family, and your future by saving up and paying cash for a good, used vehicle? You'll get it cheaper, you'll probably make a wiser choice, and you won't have debt holding you back from whatever your next step is.

I have a family of five. I bought a Toyota Sequoia that was ten years old with 130,000 miles with cash. I drove that thing for another 105,000 miles in six years and sold it for $5,000 cash. It carried my family (and friends), I didn't have to worry about a scratch or a spilled pop or a ding from someone's shopping cart, I towed tons of stuff, I carried tools and materials for my business, and I was very comfortable and safe the entire time. $10,000 cash is a lot cheaper than $50,000 plus interest, plus higher insurance premiums.