Tax season is the most anticipated season of the year for those expecting a refund. This year, however, has been dreading for many taxpayers. Delays on tax refunds this year are unheard of. The National Taxpayer Advocate Services are calling 2021 “the most challenging year taxpayers and tax professionals have ever experienced.”
Getting back what you paid in excess to Uncle Sam is a good reason to be anxious if you have been waiting too long. The challenges many faced these past two years are like no other. So, how should you use your most anticipated tax refund?
You might see and hear ads from new and used car dealerships encouraging you to use your refund check to buy a new or used car. Don’t feel you are being targeted. It turns out, one third of all Americans use their refund on an auto-related purchase, according to a survey done by eBay Motors. Purchasing a car is not throwing away your money. As a matter of fact, purchasing a vehicle can help you get your Life on Drive
Using Your Tax Refund to Purchase a Car
Are you in need of a car? Or are you in need to upgrade your old vehicle? This could be a good time to make that purchase. Don’t think this is a bad decision. Most importantly, remember that your tax refund is money you paid, and you are getting it back. Basically, the IRS helped you save it. At Shabana Motors, the best used-car dealership in Houston, our goal is to help you get your life moving forward. Bad credit shouldn’t stop you from getting the desired used vehicle you’ve been wanting to have.
1. Use the refund as a down payment for a car
If you have bad credit or no credit history, using your refund as down payment provides finance options that under other circumstances you may not have. Bringing a good down payment when purchasing a used car, can reduce your monthly payments. This also helps you build your credit in the future for larger purchases, like that house you’ve been dreaming of.
2. Upgrade you current car
If you have a car that is well past 100,000 miles with a make of 10+ years, it may be time to upgrade your car. Provided you have given the proper maintenance to your car, it may still have a few more years of use. In many cases, maintaining an old car can be more costly than upgrading to a newer car with fewer years of use.
If you are driving an old model, you are also missing out on all the features newer models include, like infotainment with Bluetooth integration, navigation system, keyless ignition, blind spot information system, and many others. Newer models also add many features with better safety components.
3. Pay off an existing loan
If you are looking into reducing your debt, consider paying off the balance of an existing loan for the vehicle you own. If the balance exceeds the amount you received from your refund, another option could be to pay several months in one lump sum, so you reduce the balance of your loan. Making extra payments at once, means you will pay off your loan sooner, which also will reduce the interest paid on the long run.
4. Refinance your current loan
Does it make sense to refinance the loan of a car?
If you purchased your car at a time when you had poor credit, or no credit at all, then this could be a good period to refinance your loan. Chances are you got caught with a high interest rate when you signed your loan.
Granted, refinancing your loan will only make sense if you have been diligent with your monthly payments without missing or skipping your payment due dates. If this is you, your credit score may have improved so you could use your tax refund as a way to arrange a better loan. Use all the refund or part of it to reduce the principal on the loan and get a better interest rate on the balance.
It is ideal for you to call your lender and learn how to proceed with this option.
Best Tip of All
The best thing to do is to research and evaluate well what makes sense for your situation. Look at your options and proceed with what you consider would move your life ahead. If you decide to purchase a used car, or upgrade to a newer model, remember that at Shabana Motors, our goal is to help you get your Life on Drive. Bad credit, or no credit is no problem for us. We get our customers approved no matter what type of credit you have. With our buy-here, pay-here financing, we are here to help you build your credit with a used car loan. Call us at 713-270-9005 and schedule an appointment with someone from our professional staff.
