09.21.26 HELOCked Into A Debt Trap / New Vehicles Under $40,000

The banks are at it again, and Clark wants to make sure you don't fall into a dangerous debt trap. Home equity levels are at record highs as financial institutions aggressively push homeowners to tap equity with HELOCs and cash-out refinances to pay off credit cards or fund lifestyle expenses. Clark explains why turning your home's equity into high-interest debt is a massive financial risk, how it mimics the harmful bank tactics of 20 years ago, and why keeping your low fixed-rate mortgage intact is critical for long-term stability. On the auto front, while major manufacturers continue prioritizing high-margin luxury vehicles over budget-friendly models, smart options still exist. Clark highlights nine major auto brands still averaging under $40,000 per sale, and reveals why the absolute best financial move you can make today is simply keeping your current vehicle on the road as long as possible. Plus, Christa shares your #AskClark questions and Clark gives his take. All this and more on the September 21, 2026, episode of The Clark Howard Show. Submit your questions: Ask Clark. Home Equity Guidelines: Segment 1 Ask Clark: Segment 2 New Vehicles Under $40,000: Segment 3 Ask Clark: Segment 4 Mentioned on the show: Is a HELOC a Good Idea? The Simple Answer - Clark Howard Which Documents Should You Keep and for How Long? China Extends 240-hour Visa-Free Transit Policy Coverage to 55 Countries Report: The Average Price of a New Vehicle - Clark Howard New cars cost nearly $50K. Here are 5 brands for under $40K -USA TODAY How To Buy a Used Car - Clark Howard When Should I Drop Comprehensive and Collision Coverage? The Center For Auto Safety Lemon Law Tips Clark.com resources: Episode transcripts Community. Clark.com / Ask Clark Clark.com daily money newsletter Consumer Action Center Free Helpline: 636-492-5275 Learn more about your ad choices. Visit megaphone.fm/adchoices

• 0:00Speaker 00

  This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.

• 0:30Speaker 01

  Your sausage McMuffin with egg didn't change. Your receipt did. The sausage McMuffin with egg extra value meal includes a hash brown and a small coffee for just $5. Only at McDonald's for a limited time.

• 0:42Speaker 02

  Price and participation may vary. Promotion pricing may be lower than meal pricing.

• 0:49Speaker 03

  It's my pleasure to welcome you here to the Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you to make better financial decisions in your life. Today, I'm going to begin with a concerning trend, turning a good financial position with home equity into a problem. And also, I got a lot to say today about the second biggest expense we have, and that's our car payments. Right now, I want to talk about something that is a plague upon us.

• 1:32Speaker 03

  And it's like we turn the clock back 20 years. Because 20 years ago, the banks were pushing home equity lines everywhere you turned. TV ads, billboards, statements, mailers in them, saying, tap your home equity. Take a vacation. Buy a boat. Buy a car. Pay off your credit cards. Whatever. The whole thing was the banks were trying to get you to eat up the equity in your home

• 2:12Speaker 03

  so you would be on the hook to them for that home equity you've given up to them by taking out the HELOC. So here we are 20 years later, everywhere you turn, online, you name it, the banks are trying the same con again, getting you to take a good thing and turn it into a bad thing, pushing you to take that equity of, you know, you were lucky enough to buy a home during a time before the big price run up that started during COVID in home prices.

• 2:55Speaker 03

  And you're sitting there pretty, you got a low mortgage interest rate, you don't owe a huge amount of money, your home has escalated in value, and the banks are trying to play on your mind and emotions that this is your piggy bank, your money, grab it, take it, use it for whatever. That's dangerous because you take this equity, this hard earned equity that you have built up, and you reverse it into debt at today's interest rates, which are much higher. And then you got to pay it back, right?

• 3:39Speaker 03

  And then suddenly you got a much higher payment. And when you go to sell your home, you don't get the proceeds you would have gotten before because now you added all this extra debt onto it. And everywhere you turn, I'm telling you, everywhere, the banks are trying to con you into taking out these HELOCs. And you know why they love them so much? Because it's a floating rate. And they set up the payments that you're never paying off the principal, that you're only paying them revolving interest, paying them the interest payments on it. And every time interest rates go up, they, within a month, have raised what you have

• 4:24Speaker 03

  to pay on it. It's a curse. You had a blessing. You got all this equity. And they turn around and say, take that vacation. Go. Spend the money. Don't worry about it. Don't worry about it. We're going to lend you that money. And then if you can't pay it, we're going to take your home from you. What a deal. Yuck.

• 4:53Speaker 04

  Do you like home equity?

• 4:54Speaker 03

  I'm definitely going to be honored as Person of the Year at the American Bankers Association Annual Convention. You know that's going to happen.

• 5:01Speaker 04

  Yeah. Yep. All right, we'll go to questions. Patricia in Georgia, here you go, Clark. What is the least expensive way to tap into our home's equity?

• 5:12Speaker 03

  Oh, my goodness.

• 5:13Speaker 04

  Yeah.

• 5:14Speaker 03

  You really, you really teed that up.

• 5:16Speaker 04

  I did, sorry.

• 5:17Speaker 03

  Okay, Patricia.

• 5:18Speaker 04

  Because there are instances when it could be a good thing to do.

• 5:22Speaker 03

  Okay, let me hear.

• 5:24Speaker 04

  Okay, I am about to sell my home, didn't, had taken out an equity line but never used it, and used some, a small amount of it, to repair and do things to fix up the home before it went on the market.

• 5:38Speaker 03

  Okay, so what's my rule always been about tapping home equity?

• 5:42Speaker 04

  Tell me.

• 5:43Speaker 03

  What you just said.

• 5:44Speaker 04

  Well, it's for improvements to your home.

• 5:45Speaker 03

  It's always been for improvements to your home. You're renoing the kitchen, or you have to put on a new roof, or you're updating the bathrooms, or whatever it is where you are putting money into the home that improves the home. But what goes on so often is people are borrowing that money against the home for various lifestyle things.

• 6:11Speaker 04

  Right, pay off credit cards, or, you know, car loan.

• 6:14Speaker 03

  And...

• 6:15Speaker 04

  Ding ding ding, we're about to talk about car loans later.

• 6:17Speaker 03

  And by the way, on the thing with the credit cards, a lot of financial planners are encouraging their customers, their clients, to take out a home equity line of credit at maybe 8% and pay off 25% credit card debt. Okay, so if you just look at the dollars and cents of that, that makes sense, right? Even though you're impacting the equity you have in the home, and you go from debt against your name to debt against your home. The problem is, so often when somebody does that, the credit cards get charged back up again, and they have debt against the home.

• 6:58Speaker 03

  So I've never even gotten to answering Patricia's question, which is, I don't know why you're tapping your home equity, but the key is 36 months. If you're going to borrow against the equity of your home for 36 months or less, usually you're better off doing a home equity line with that floating rate. A lot of financial institutions, particularly credit unions, make the setup free on those home equity line of credits. But if you're going to, let's say you're redoing a kitchen, and you know you can't pay it back in the next two or three years, then you do a home equity loan.

• 7:42Speaker 03

  Again, credit union, there's a big credit union product, and you borrow at a fixed rate for five years. Now, there are credit unions that will lend you home equity loan money for 10 or 15 years, but the risk profile for them is so much higher, the interest rates are much, much higher at 10 or 15 years. This is good five-year money for a project improving your home.

• 8:08Speaker 04

  Becky in Ohio says, once your mortgage is paid off, do we need to keep all of the mortgage paperwork?

• 8:13Speaker 03

  Just your proof you paid it off.

• 8:16Speaker 04

  That's a great, great question for a great reason.

• 8:19Speaker 03

  Great, and Becky, this surprises people who have mortgages. Roughly a third of homeowners own their homes free and clear now.

• 8:27Speaker 04

  Wow, that's great.

• 8:28Speaker 03

  Good job, Becky.

• 8:29Speaker 04

  Justin in Hawaii says, my family and I are going to Japan. While on that side of the planet, we've planned to visit Beijing. Online research suggests we don't need a visa to visit China as long as we are there for 10 or fewer days and don't return directly to the same country we left, from Japan in this case. We're planning on going to Tokyo, to Beijing, to Seoul, to Tokyo, using just our passports. Does that really work? We don't want to be denied entry or exit. Mahalo.

• 8:58Speaker 03

  Right, so first of all, Justin, I hope that you came through the recent hurricane A-OK, and everything's fine with that. Yes, it's a little-used, little-known thing, and a lot of people are afraid to use because they're so worried they'll get to immigration, they'll say, nope, nope, nope, can't do it. But many international travelers use the 10-day visa. It's like a visa, but it's issued on arrival. So you said the key rules. You have to have come to China from one place, one country, and then go from China to another country.

• 9:39Speaker 03

  And as long as you do that, and you're there less than, it's not 10 days, it's under 240 hours. So if you, if you ended up there 245 hours over 10 days, you're not okay. But yes, you can do that.

• 9:58Speaker 04

  So visa on arrival.

• 10:00Speaker 03

  Visa on arrival, essentially, or it's called, I think it may be called the 240-hour visa.

• 10:07Speaker 04

  Okay.

• 10:08Speaker 03

  Yeah. It's the only way I'll ever get into China, right? No?

• 10:12Speaker 04

  Okay.

• 10:13Speaker 03

  They won't issue me a visa, that's a whole different story for another time. Coming up ahead, we're going to talk about a different thing, and that is cars, and how much they cost, and what a conundrum that's causing for people right now. What do you do about it?

• 10:32Speaker 05

  You're a creator, a driver, a doer, not just a nine to fiver. So check out the Spruce mobile banking app by H and R Block. Spruce is designed for the ups, downs, and unexpected of modern work and life, helping you take control of your money no matter how you earn. It's your financial toolkit that makes progress seem possible. No judgment, just help. Sign up for Spruce today at sprucemoney.com. Spruce fintech platform is built by H and R Block, which is not a bank. Bank products by Pathway N A, member FDIC.

• 11:03Speaker 00

  This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now, then this is a job for Indeed sponsored jobs.

• 11:32Speaker 01

  Your sausage McMuffin with egg didn't change. Your receipt did. The sausage McMuffin with egg extra value meal includes a hash brown and a small coffee for just $5. Only at McDonald's for a limited time.

• 11:45Speaker 02

  Price and participation may vary. Promotion pricing may be lower than meal pricing.

• 11:48Speaker 06

  Low energy, unfocused, foggy? You might be dehydrated. Gatorade Zero powders have been scientifically designed to help improve hydration balance in the body with a clinically proven electrolyte blend and no artificial colors or flavors. Great tasting hydration, no matter where you're going. Shop now online or at retailers nationwide. Gatorade hydrates better than water. Is it in you? Symptoms noted are signs of mild to moderate dehydration. Consult a healthcare professional if symptoms persist.

• 12:17Speaker 02

  When you're building a company, you learn that trust is what closes deals. You may have the best product, but buyers won't sign without proof that your product is secure, especially if it has AI. Vanta gets you compliant fast with SOC 2, ISO 27001, and more, and keeps you secure with continuous monitoring. Hyperbound, a YC backed startup, used Vanta to unlock the Fortune 100 in under a year. Snowfire got audit ready in a month and closed a multimillion dollar deal. Trust matters. Get started at vanta.com.

• 12:46Speaker 03

  Cars. Wow, have they gotten expensive? And Ford and GM have both made a decision, along with some of the European brands, that they would rather sell a lot less metal. They call it metal. A lot fewer cars for a lot more money than get market share. And so even though conditions that caused the big boost in prices during COVID went away and automakers could make much less expensive vehicles, that's not the business they're in now.

• 13:26Speaker 03

  They're happy to sell a lot fewer units and make a big profit per by limiting the supply. Well, not everybody is doing that. And I want you to know that USA Today put together a list of the brands that the average price of a vehicle they sell, instead of being 50 plus thousand, as it is now for the American automakers and for the Europeans, that they are specifically targeting selling cheaper. And there are American, various American options on the list as well.

• 14:08Speaker 03

  First, a company that doesn't sell a lot of units at all, Mitsubishi. The average price of a vehicle they're selling is 34 grand. Buick, 36 grand. So again, well below the 50. Nissan, 37 grand. Hyundai, 37 grand. Mazda, 37 grand. Subaru, which by the way Subaru is Consumer Reports' favorite brand sold now. They've come like out of nowhere to be Consumer Reports' choice as the overall most reliable brand. Average price, new vehicle, 37.

• 14:53Speaker 03

  Honda, 37. Think how many of these right in a row, 37 grand average price. Kia, 38. We got a European Volkswagen rounding it out at 39,000. So remember, these are average prices across all the models, not suggested. That's what the average price of the vehicle sold for of those brands. So although there's been a big movement, I mean Buick's owned by GM. GM's general strategy is to sell much more expensive. But the Buick brand is one of the cheap ones.

• 15:35Speaker 03

  And you have well-known reliable brands available at more affordable prices for a new vehicle, which also means that most people's action is in the used vehicle market and buying something that's been reliable. And this is where Consumer Reports becomes really helpful. It's looking at the reliability records of various brands' used vehicles, reduces the chances you're going to buy trouble. But the best thing of all is to keep what you're driving, driving. Because with more and more people facing a monthly payment of more than $1,000,

• 16:19Speaker 03

  more than $1,000, compared by comparison, you have a paid for vehicle. So then all you got to do is pay for the fuel and the maintenance repairs. At some point, that becomes too much of a hassle. But if you can keep that on the road, think about that, then that's a no monthly payment. And vehicle values depreciation flattens, meaning that after the first several years of ownership, the decline in value of that vehicle year by year is teensy tiny. So you don't have to worry about depreciation that much. You just keep on driving.

• 17:00Speaker 03

  And I want you to think this way, because the longer you can keep a vehicle on the road, the cheaper it is to insure it. Think about that. And the monthly payment you're not making. Oh, you know, one other trend, Krista?

• 17:19Speaker 04

  What?

• 17:20Speaker 03

  That's happened over the last year and a half, maybe because of inflation, particularly inflation this year. A lot of prior luxury buyers are now buying as replacement non-luxury models.

• 17:33Speaker 04

  So you may have been an Acura person, now you're a Honda kind of thing?

• 17:37Speaker 03

  Exactly.

• 17:37Speaker 04

  Lexus to Toyota?

• 17:38Speaker 03

  Yeah.

• 17:38Speaker 04

  All right. Mary in Wisconsin wrote into you, Clark, about her car. My 2018 Subaru is paid in full, a great feeling. It has 115,000 miles. I'm newly retired and wondering how long to keep full coverage. I guess my car is worth around $12,000 to $14,000 now. It runs great and I keep up with basic maintenance. I kayak with my English Springer spaniel. And even though I'm not a fan of wagons, this car fits my needs pretty well. I don't have extra funds to trade it in or have another payment plan for years, for years. Clark, help a newly retired woman with this issue, please.

• 18:17Speaker 03

  Well, Mary, congratulations on being retired. Congratulations on your vehicle being paid in full. And congratulations on buying a brand that I just talked about two different ways, Subaru. So 115,000 miles has got a long way to run.

• 18:34Speaker 04

  Just a baby.

• 18:35Speaker 03

  It is, it's more like a teenager.

• 18:37Speaker 04

  Okay.

• 18:39Speaker 03

  Awkward teenager stage.

• 18:41Speaker 04

  I mean, if someone tells us they have 200,000 miles on a Toyota, you call it a baby.

• 18:45Speaker 03

  Well, because Toyota's.

• 18:47Speaker 04

  They go forever.

• 18:48Speaker 03

  Yeah. So worth 12,000 to 14,000. It's got way too much value for you to dump coverage on the vehicle itself for collision comprehensive. When you get down to the cost of the collision comprehensive being more than 10% of the remaining value, that's when you start thinking about dumping the coverage. But then the other thing I think about, if your vehicle was totaled, you're out 12,000 to $14,000, what financial harm would that cause to you?

• 19:22Speaker 03

  If you're saying a lot, then you keep paying for that coverage till the vehicle's worth substantially less, which will be years from now.

• 19:31Speaker 04

  Another Mary, this Mary's in Iowa, wrote in with this, should I go through the non-guaranteed lemon law process or offload a car for a $10,000 loss? We bought a new car in March from a dealer about 100 miles away. It's what I wanted and it cost $45,000. When we took delivery, the detailing team damaged a piece and they offered to replace it, which was completed a couple of weeks later. About a month later, a random electrical error took us to a closer dealer. They decided that it wasn't a warranty issue and was the other dealer's fault, but forced us to pay for the $1,500 repair.

• 20:08Speaker 03

  Okay, this is getting complicated in a hurry.

• 20:10Speaker 04

  Yeah. The original dealer has offered to reimburse us, but hasn't yet. Since then, it's had random, non-related electrical issues, which have taken us back to the closer dealer, but those have been labeled warranty issues. I love this car when we bought it, but it has had errors and warnings for about half the time we've owned it.

• 20:29Speaker 03

  Okay, we're done. So the, the thing that happened with the damage with detailing and the front, that doesn't account for having multiple electrical problems? So let's just push that aside.

• 20:41Speaker 04

  Well, let me finish the question. I feel like you didn't get the whole thing. Now the check engine light is on. I want you to hear her actual question.

• 20:49Speaker 03

  Okay.

• 20:49Speaker 04

  I stopped the engine, okay, so there's a check engine light and some errors. We've gotten an offer to trade it in for $10,000 less. Would you wash your hands of this car, try to go through the lemon law to prevent someone else from taking over this lemon without that protection?

• 21:05Speaker 03

  Right. Absolutely do the lemon law process. Lemon law process is not used as much as it used to be. Follow it to the letter. The lemon law process works repeatedly for people, as long as you document properly, but you have specific time sensitive things you need to do. And the longer you wait to file it, the more hassle. You go ahead and file lemon law and then that starts a process of attempts to repair. If there are really weird electrical system things happening, you got gremlins in that car.

• 21:46Speaker 03

  If the manufacturer will be given an attempt to do a final repair, as you'll see, if you follow the process, you're in the state of Iowa. So Iowa will have its own procedure of how that's done. And then at that point, the state law will have a formula that's much more favorable to you than taking a $10,000 hit, where they buy the vehicle back. Now here's the discouraging part. When they buy the vehicle back, it still ends up being sold eventually to someone else. It's not like the car that was lemon lawed is taken to a junkyard and crudged.

• 22:28Speaker 03

  Crudged, crushed, whatever. But the important thing, we got to protect your wallet and your rights. So all you do is go online and look up lemon law Iowa, pull it up. It'll walk you through the procedure and do it exactly as written and document that you've done so.

• 22:51Speaker 04

  Can you imagine she bought a new car in March and they're offering her a $10,000 less trade-in right now?

• 22:57Speaker 03

  As soon as you drive a vehicle off the lot.

• 22:59Speaker 04

  So crazy. Robert in Georgia says, Clark, my medical provider referred me to the same diagnostic testing facility for two tests, four months apart. On the date of both tests, the medical office informed me of what the payment was needed and required. When I later received my explanation of benefits for the second test, I noticed that the patient responsibility was less than I had paid at the second visit. I called to ask about this and was told, yes, you overpaid and we owe you a refund. Even more concerning, the representative noted that I also overpaid for the first test four months earlier and had never been notified. I had not reviewed the first EOB, my mistake. In fact, when I returned for the second test, the office simply accepted and required another

• 23:43Speaker 04

  payment without mentioning the existing credit. Had I not carefully reviewed my EOB, I have no idea whether I would have ever received the money back. It took multiple calls over two weeks to finally receive both refunds, which totaled more than $500.

• 23:58Speaker 03

  Wow.

• 23:58Speaker 04

  As the representative noted, "problems with the credit card machine," in quotes. This experience was a real wake up.

• 24:05Speaker 03

  What does that mean?

• 24:06Speaker 04

  This experience was a real wake-up call for me. Read your EOBs and compare the patient responsibility amount with what you actually paid. If the EOB shows you paid more than your responsibility, follow up immediately.

• 24:18Speaker 03

  Robert, thank you very much. And I'm going to cut them some slack at the place. Medical back office billing is such a messed up thing. The complexity of it to start with, and it's the lowest of low priorities in medical facilities. So they mess up billing all the time. If you are fortunate enough, like you are, that you have health insurance, you need to cross-reference what they tell you your share is, and then what shows up on the EOB, just like you did. And just because you did that, you've got more than $500 back in your pocket.

• 25:00Speaker 03

  I hope that you taking the time to share your story, Robert, will inspire others to do the same, to take that time and review the EOBs when they come in. I know they're confusing. So you gotta sit there and I look at them page by page and they keep trying to get me to go to paperless. I won't do it because I really need the paper to thoroughly look at it, cross-reference, make sure that I'm not overpaid. I've never seen that I've underpaid. And do what you did. So if you're not, if you're not opening those things up, you're not checking them out,

• 25:45Speaker 03

  it's your money. You don't want to throw it away, right? So good lesson for you from Robert. Thank you. And thank you so much for joining us today. I hope that you had a great weekend this past weekend and that this week, rest of this week works out great for you. We will be back at your service on Wednesday with another edition of our podcast and YouTube show. But all week long, we're serving you at Clark.com and Clarkdeals.com. Everything we do, empowerment for you through knowledge, so you can save more, spend less, and avoid getting ripped off. Have a great day.