Getting a big chunk of change back in the form your tax return is always a fun way to start the new year, and what better use can you put it to than buying a new car? Here’s how to use your tax return as a down payment or even the whole cost of a new or used vehicle.
Once you get your refund, figure out how much of it you’re willing to put toward a new vehicle. You might want to keep some in savings or put it toward bills or other expenses, or you might be comfortable and prefer to put all of the money toward your car.
Next, figure out how much you can afford to pay a month, and don’t forget to think about maintenance, car insurance, and other little expenses you might encounter as a car owner. If you can’t afford to make a high monthly payment, consider a used car you can buy outright.
You also need to consider whether you want to use your tax refund as one big down payment or use it to make monthly payments. A big down payment reduces the size of your loan, but if you use it for monthly payments on a bigger loan, you can keep the money in the bank for emergencies and you won’t have to worry about a car payment for a few months.
Another way to use your refund on a new car is to put it toward principal-only payments. Paying just on the principal reduces how much interest your car will earn over time, which means you ultimately pay less money for it.
Once you decide exactly how you want to spend your refund on a new car, it’s time to start researching the perfect car that fits your budget and needs. If you’re on the fence about a car you’ve researched online, don’t hesitate to head to the nearest dealership to test drive it! We’re happy to accommodate you at Copeland Chevrolet