Ways to Use Your Income Tax Return Toward a New Vehicle

You may have already filed your taxes and are expecting a refund. Even if you aren't, it's a good idea to begin thinking about how you can use that extra income toward a new car. There are several ways to put your tax refund to work for you, so consider the following options:

Use Your Tax Refund Toward A Down Payment

The biggest hurdle for many prospective car buyers is saving up for a down payment. A generous tax refund can help you reach that goal more quickly. Having the cash on hand can also make it easier to negotiate the best price with the dealer or increase your chances of getting financing. For example, if you're buying a $20,000 car, putting $5,000 down will reduce your monthly payments by about $100 - which could save you thousands of dollars over five years.

Consider Buying a Pre-Owned Vehicle With Your Tax Return

You may think that buying a car with your tax return means you won't have enough money to get what you want. However, used vehicles tend to be much less expensive than new ones, making them an ideal choice for those trying to save money. Some pre-owned cars can even come with factory warranties or special financing offers that make them an even better deal.

Service Your Existing Vehicle

If you're considering buying a car with your tax return, the first thing to do is to make sure it's the best use of that cash. For example, if your current vehicle needs major repairs and a new car payment would be more than you spend on repairs, it makes sense to look into a new set of wheels. However, if you could keep your car running for another year by making minor repairs, you'd be better off waiting until next year and using this year's refund for other expenses.

Pay Off An Existing Loan

If you already have an auto loan, using that tax refund to pay off some balance could be another option. It will improve your credit score, which in turn may help you get approved for lower interest rates in the future. You'll also save on interest by paying off part of the loan early.

These ways, you can use your tax return to buy a car, but if you have any questions about ways you can utilize your tax return toward a new or used car, don't hesitate to get in touch with one of our friendly sales representatives.