Q:

new car loan vs use mortgage loan to pay for car

We have a mortgage loan for 3.5%  and just got a car loan for 1.49%. My husband thinks we should pay off the car with our mortgage loan instead of using the car loan because we can claim mortgage interest or something like that. I think that we should use the car loan to pay off the mortgage loan. Does that sound crazy? Thanks for any help.

A:

Why would you trade a lower interest rate over a higher one?  I wouldn't use the mortgage to pay off the car.  Also, you should have loan/lease payoff on your auto insurance, which if the car is totaled means your loan would be paid by insurance.  I don't think you'd be able to take advantage of that if your car payments become one with the mortgage.  Finally not all mortgage interest may be deductible.
Also, I can't think of any way you'd be able to use the car loan to pay off the mortgage.  You wouldn't be able to borrow more than the car is worth, and for a new car it loses quite a bit of value immediately.

