Come tax season, you might expect to receive a significant amount of money in your refund. While it’s tempting to use it on splurge purchases, keep in mind that your hard-earned money might be better spent checking out cars that offer more benefits. Below are a few considerations to remember as you prepare to buy your next automobile.

How Does a Tax Refund Affect Financing for a Car Purchase?

On average, Americans receive a tax refund that amounts to almost $3,000. However, this isn’t free money because it’s more of an interest-free loan that you made to the government. In other words, it’s money that you worked for that should be wisely spent on worthwhile expenses such as auto financing. With your tax refund, you can cover the down payment for your next car, and obtain lower financing costs. If you are interested in buying used, know that you can more than likely afford a 12% down payment.

Be aware that the larger your down payment, the lower the monthly fees you need to make. This makes it easier for you to get the car that you want with a friendlier payment term. If you have poor credit, you can use this to your advantage by demonstrating to the lender your seriousness in taking on the loan. As an alternative to using your tax refund for a down payment, you can instead spend it on the monthly payments of your new auto loan.

What Should You Consider When Using Your Tax Refund to Buy a Vehicle?

Before going through with your purchase, look at several cars, and weigh all of your options. It is more practical to go with the best pre-owned vehicle, rather than spending all your tax refund in one place and leaving nothing for emergencies or insurance costs. If possible, allot only about 60% of your refund for the vehicle. Don’t forget that you have to figure your monthly payments into your budget, so pick out something that you can afford with your income. Additionally, consider applying with several lenders to see which has the best loan terms and interest rates. 

Put your tax refund to excellent use by browsing through the large selection of quality used and pre-owned cars at Hollywood Motor Co. in Breckenridge Hills, MO. For over 40 years, this car dealership has been a trusted name in the industry when it comes to flexible financing opportunities, exceptional sales, and comprehensive auto repair. Call (314) 423-0033 to know more about their services, or visit their website to see their extensive inventory.