Even though you are getting back your own money, a tax refund can feel like a bonus. This lump sum can help you make a big purchase or pay off bills, depending on your wants and needs. If you're thinking about buying a new car, it makes sense to use your tax return as your down payment. According to the IRS, the average tax refund is about $3,000, which is a significant amount of money to use towards the purchase of a vehicle.
A considerable down payment is an essential factor in securing an auto loan, especially if you have poor credit. It can create finance options that may otherwise have been out of reach. A down payment shows the lender how serious you are about taking out a loan, and it reduces the loan amount, making the monthly payments smaller. If you prefer, you can save your tax return and use it towards monthly payments on your vehicle instead. This option might afford you more security for a more extended period, but it will not shorten the length of the loan or reduce the monthly payment.
Before you head to the dealership, it's crucial for you to calculate what you can afford. With extra cash in hand, you don't want to stretch your budget and regret it down the road. The experts at Hometown Auto can help you select the right vehicle for the right price. Even if you have bad credit or no credit history, we can help you secure a loan and come up with an affordable monthly payment plan.