Tax season is here and if you’re waiting for a W-2 or you’ve already received one, you may be thinking on the ways you can use your tax refund for a big purchase like a car for instance. If you’re not financially set for a vehicle at the moment, you can use your tax refund for an auto loan! Below are the options that you can consider.
Option # 1: Use the Refund to Purchase a Car
If the thought of leasing or financing a car is running in your mind right now, your tax refund is going to be a good way to finance the down payment or use it as a capitalized reduction of the overall cost. In the world of auto loan and financing, a bigger down payment can significantly reduce the payment that you’ll be doing each month and even lower the interest rate. This would make your auto loan a lot more affordable. Even with poor credit as long as you put the money down first, you can easily get approved for a loan. If you are going to lease, a capitalized cost reduction or the down payment for a lease would help you do pre-payment for the lease and lower the monthly repayment rate. It also helps you save precious money in the future.
It is even usually required by lenders who are in the subprime category. If you’ve received a tax refund that is able to cover the required down payment, you can choose to use that amount. You can even apply trade-in equities if it’s available or combine the tax refund with it so you can place a larger down payment. It all depends on how much the lender requires as the down payment amount and how large your tax refund is.
Option # 2: Use the Refund the Car That You Currently Own
The tax season is a common time where people purchase a car but if you don’t want to use your tax refund for getting new wheels, you can use it to make your current auto loan more affordable instead! Here are two ways in how you can use the tax refund for this purpose:
- Pay Down Your Current Auto Loan – You can always use your tax refund to make extra payment for any loan that you have. This would significantly reduce interest rates and help you save money. In case you have equity in your vehicle that is on the negative range, you can use the tax refund to get yourself out of that problem.
- Use it to Refinance Your Current Loan – If you currently have a bad credit auto loan and you’re charged high interest rates, you can use the tax refund that you received to lower the balance that you owe. It helps refinance the loan that you currently have so you can get lower repayment rates and better interest rates.
Help For Those Having a Hard Time Finding a Dealer
You have the control on the way you would use your tax refund. If you want to use it for a car purchase but you’re worried of the bad credit that’s looming on the horizon, we want to be of help. Just post your comments below on the kind of problem that you have or those that you foresee and we’ll do our best to give sound financial advice which can help you today and in the future as you do repayments for any loan that you have.