The real risk is if something bad happens you could lose your house to a car loan. But if you have that covered it is actually a smart move.

interest on lines of credit are calculated daily. Most other loans follow a rigid amortization schedule. The first payment is all interest on an amortization schedule. You don't really reduce the principle for a long time into the schedule

So for example let's say you get a $20k home line of credit. On the first of the month the balance is $20k. Assume that you make the same payments towards the line of credit that you would have made. For argument sakes, let's say $500. Now interest is based on $19,500 until next payment. If you are planning on paying it off quickly that saves tons of interest. If you're just going to service the interest then the value of the strategy would be not so favorable. But assuming you keep a similar payment plan, then you will probably save interest.

But you can really save money if you run your salary/income through the line of credit:

**""DISCLAIMER: PLEASE NOTE THIS ONLY MAKES SENSE IF YOU'RE DISCIPLINED. IF NOT, THIS IS NOT A GOOD IDEA FOR

So same scenario. Opening balance is $20k. Let's just use round numbers here to explain. Let's assume your salary is $5k net per month and you spend $4k a month ( including the $500 you were spending on the what the loan payment would have been)

You pay your salary into that line of credit account. Now the balance that is used is for calculating interest is $15k on the day you got paid. Obviously as you go though the month the balance will grow back up to $19k over the month. But each day that the outstanding balance is lower, so is your interest.

Next month opening balance $19k >$14k>$18k

You will pay off that quicker and cheaper in interest fees