How to Use Your Vehicle to Make the Most of Your Tax Return
Now that you have received your tax refund, you might be thinking about all the things you could do with it. Though you could put the money in your savings account for a rainy day, you might want to consider using the money on your vehicle. If you have one, a good way to invest your money is to pay it off. If you don’t own one, you should consider buying a car or truck.
If you decide to purchase a vehicle, consider getting a used one. There are many great used and pre-owned vehicles in excellent condition that are just waiting for new owners. Think about how much money you want to spend on a vehicle. If you plan to finance, use the additional money to boost your down payment and spending power.
How Down Payments Work
Keep in mind that a down payment may not be necessary with some dealerships. Your credit worthiness will help to determine how much you qualify for. For example, a $5,000 down payment can lower the monthly payment on a $20,000 car loan by almost $54. That is assuming you also received a $5,000 trade-in credit on a 60-month car loan that has a 2.9 percent interest rate. A good rule of thumb to consider is the 10 percent guideline. Every $1,000 you put towards your down payment shaves 10 percent off the monthly payment on vehicles that are priced $10,000 or more.
Pay Off an Existing Loan
If a new or used vehicle purchase is not an option, think about how you can use your refund towards extra payments on the one you have. For example, a $3,500 refund is enough to cover 11 months of payments. By paying those payments now, you can enjoy the convenience of not having to make another payment during that time frame without falling behind.
Another option is you could use your down payment towards the balance and reduce the amount of interest you’ll pay over the life of the loan. Before you make any extra payments, you should talk to your lender to learn your options. Some lenders require prior notification to ensure all extra payments are applied properly.
Research your options. In order for you to use your tax money wisely, you need to have a good understanding of your options. For more assistance in maximizing your tax refund and in getting the right vehicle for your needs, stop by Hometown Chevrolet. If you have questions or would like to schedule a test drive, call us at 740-835-4217.