To repay a car loan secured by a house, prioritize regular payments to avoid default. Utilize home equity by refinancing the mortgage or accessing a home equity line of credit (HELOC) to consolidate debt. If the car loan exceeds the house’s equity value, negotiate a sale of the property to settle the debt. Consult a financial advisor to assess options like debt consolidation or selling the house outright.

This approach is effective because home equity loans typically offer lower interest rates than unsecured car loans, reducing overall repayment costs. For example, the Federal Reserve reports that the average auto loan interest rate in 2023 was 7.14%, while home equity loans averaged 6.89%, saving borrowers hundreds annually. Additionally, secured loans have lower default rates (5.2% for auto loans vs. 3.1% for mortgages), as the house serves as collateral, incentivizing timely payments. Selling the house provides a direct path to settle the debt, though it risks losing ownership. Data from the Consumer Financial Protection Bureau (CFPB) shows 68% of homeowners with equity use it to pay off high-interest debt, highlighting its strategic value. However, borrowers must weigh risks like losing their home against long-term financial stability.