Does it make sense in some cases

to take out a HELOC if the result is paying off debt sooner? We have the following debt:
Home Equity Loan – $13,000 @ 5.75% Monthly payment is $166 Payoff as amortized is 2018
Car Loan – $10,000 @4.89% Monthly payment is $281 Payoff as amortized is 2013 (With extra principal – just two years)

Each month, I’ve been sending the bank an extra $118 toward the car payment and each month I have to call them to have them make sure it’s been credited toward the principal. It’s a nightmare and I’ve posted several times about this. My credit union holds the home equity loan.

We can open a HELOC and combine the two loans. The interest rate is 3.75% right now and the payment would be 2% of principal adjusted as the balance goes down. The rate is adjustable over prime. The 2% right now would be about $100 less than I have available for payments so technically we could pay this off in about 45 months. We’d be debt free. We have no credit card debt beyond our monthly balance.

The risk is the interest rate. I’m not sure what it would do over the 45 months it would take us to pay it off. There is also a $250 fee to open the HELOC which I do have in cash.