Ways to Use Your Income Tax Return Toward a New Vehicle

Tax time can be a great opportunity to save for a new vehicle. While it's easy to spend your tax refund on a shopping spree or splurge on an expensive vacation, using your return toward a car purchase can get you behind the wheel of an affordable vehicle.

Use Your Tax Refund Toward A Down Payment

You can put it toward a down payment on your next vehicle if you have a large tax return. The larger the down payment, the lower your monthly payments will be, and the less interest you'll pay over time. A large down payment can also help with trade-ins and getting out of an upside-down loan, where you owe more than your car is worth.

Consider Buying a Pre-Owned Vehicle With Your Tax Return

If your tax return can cover the entire purchase price of a used vehicle, think about whether it makes sense for you to take out a loan anyway. For one thing, if you get a loan for the purchase price (and use your tax refund as a down payment), you'll own the vehicle outright once you make your last payment. This is different from paying for the car in full with cash and being responsible for all repairs and maintenance costs yourself. On the other hand, it can be nice not having to worry about making another monthly payment - make sure you have enough money.

Service Your Existing Vehicle

One of the first things to realize is that there are plenty of ways to update your vehicle without buying a new one. If you have an older car, even something as simple as getting new tires can make a big difference in its appearance and performance. Hallmarks of an aging vehicle like rust spots can often be fixed by replacing small parts - so long as there is no serious damage to the frame. A complete tune-up can also make an older vehicle run like new by optimizing its performance factors.

Pay Off An Existing Loan

Putting your tax return toward an existing loan is a great way to pay down some of those high-interest loans you may have been carrying for years. It can also help lower your monthly car payment by faster eliminating some of the principal balance. You can use this extra money to pay down other high-interest debt or take care of any major repairs. Even if you don't have a large refund coming back this year, every little bit helps when it comes to knocking out your car loan.

We're here to help you find the car of your dreams, and we don't want you to miss out on the benefits of utilizing your tax return toward your next vehicle purchase. If you have any questions, please do not hesitate to get in touch with us-we're always available to provide additional information.