Pick up a loan with your lumber?

Grommets, potting soil, spackle - home loan? That's what The Home Depot is now offering in some stores. After a 10-minute application process, the home-improvement-supplies chain gives qualified consumers credit lines of between $3,000 and $30,000, and 10 years to pay them off. Interest rates range from 10.99 percent to 14.99 percent, depending on credit history. Shoppers have six months to use the credit line at the store. After that, the loan can be converted into a "tax-benefit option," which means a home-equity loan.

Sound pretty good? Maybe, but go into it - and any such deal - with your eyes open, say consumer advocates and authors Marc Eisenson and Nancy Castleman.

"Miss payments, and that tax benefit could turn into the nightmare of a foreclosure," says Ms. Castleman. "Plus, you always need to be careful when you're offered easy credit. One-stop loan shopping sounds great. But when it's so convenient, you may neglect to shop around for the best deal...." She says some rates could be up to 2 percent lower than The Home Depot's lowest rate. Other tips:

*If your home project ends up taking a year or two, a home-equity line of credit might be a better option than a home-improvement loan.

*Prepay your loans. A Home Depot loan of $30,000 repaid over 10 years, for example, could cost $49,569 to $58,057, depending on the interest rate. "But if you make regular prepayments of $100, you could save up to $9,763 in interest," says Mr. Eisenson.

(c) Copyright 2000. The Christian Science Publishing Society