While many people dislike tax time, there are some benefits to getting your taxes done. The minute you get your W-2s, you have the potential to finish your paperwork and get some cash back. While it may seem fun to take a vacation or buy some new threads, one excellent investment is a car. Why not take this year’s refund and use it to get something that can help you in many areas of your life. Here are four benefits of using your tax refund on the purchase of a vehicle.
Your W-2 may help you get into a car even with bad credit
Every lender has a different system. Some truly understand that it can be difficult to repair your credit quickly in today’s economic climate. They also know that without a car, it can make it even more impossible to get to work and make the money you need to fix your credit. Instead of pulling your credit, these lenders will look to your pay stubs, W-2 and projected tax refund to get you into a car. Your tax refund will provide the needed down payment, and your job will take care of the rest. It’s an excellent way to get a reliable vehicle in 2016, even if you have bad credit.
Refunds as down payments
Sometimes a large chunk of money is hard to come by. You work, you pay your bills and maybe even you manage to get a little into savings—usually there’s not much left over to build up a good, solid down payment for a car. A tax refund can be that ample amount you need to get into a vehicle. The situation can be extra beneficial if you have a car on its last legs. Use the car as a trade-in plus add your refund in as a down payment. With all the extra cash, you have the potential for a nice, affordable monthly payment on your sweet new ride.
Flat out buy a car
What would you do if you had a nice sum of money? Instead of blowing it on something that is fleeting, why not buy a car—as in the whole thing at one time. Some refunds are enough to help you buy an entire vehicle. What does that mean for you? No monthly payments. Sure, you’ll still need insurance, gas and maintenance, but it can be a huge relief not to worry about an additional monthly expense.
Pay down your existing car loan
What if you recently bought a good, used car—what should you do with a tax refund then? You never know what life is going to throw at you. If you have debts, it is beneficial on several levels to pay them down or off. Not only can it give your credit a nice boost, it is one less payment you have to worry about. If you already drive a decent whip that you don’t feel the need to part with, use a portion of your refund to pay down your existing car loan. If this is a route you’re interested in taking, make sure to call your lender to see how to proceed.
What you’ll need to do to get into a vehicle in 2016
If you’ve decided to use your tax refund to purchase a vehicle, there are a few things you need to do to get prepared before heading to the dealership.
- Pull your credit: Each year you get a free credit report. Order yours to see where you stand. If you want better rates, you may need to take a couple extra months to reduce some of your debt and start paying accounts on time. Knowing what is on your credit report is also a tool that tells lenders that you are taking your finances seriously.
- Gather information: If you plan on applying for a loan you’ll need basic information readily available. Have a W-2 and/or pay stubs, a co-signer if necessary, address, ID and a budget.
- Do your research: The more information you’re armed with, the better. Before you go to the dealership, know what vehicles you’re interested in and their current values. Look up the value of your current car if you plan on doing a trade. Research inventory and specials at dealerships you plan on visiting to make sure you’re getting the best price possible. Finally, make sure to get as much vehicle history as you can before you sign on the dotted line.
Tax season doesn’t have to be stressful or something to look at negatively. Instead, see it as an opportunity to get yourself into your next vehicle.
