During tax season, you hear advertisements from dealerships urging you to bring in your refund check to buy a new car. This is probably because a third of all Americans spend their refund on an auto-related purchase. And, since the average refund is about $3,000, according to the IRS, what's the best way to spend this money?
First, keep in mind that this is not "found money." It is actually your money, being returned to you. But, since most people don't include refunds in their budget, the temptation is to view it as a bonus and splurge. Instead of blowing it on the extravagance of a brand new car, why not use it to get ahead of the game. If you need new wheels, this is a good time to make that purchase. But you should spend your hard-earned money wisely by carefully considering the following options:
Use your money as a down payment on a used car. Perhaps the most important factor in securing an auto loan for a buyer with shaky credit is a substantial down -payment. Particularly for shoppers with poor credit, using a tax return as a down payment can create finance options that otherwise may have been out of reach.
A $3,000 down payment does a number of things to help a customer with challenged credit. First, it shows the lender how serious you are about taking on a loan. It also reduces the likelihood of you being upside-down during the life of the loan. But most importantly, the reduction of the loan amount causes a smaller payment to fit better into your budget and therefore it's easier to get approved.
Fix or upgrade your current car.
Many cars these days can be driven well past 100,000 miles, provided the vehicle is well maintained. Many experts say that maintaining a used car is much thriftier than buying a new one. So where do you spend your upgrade money?
It is no secret that a set of new tires can greatly improve ride quality, reduce road noise and even improve fuel economy. A major tune-up further boosts fuel economy, smooths out a rough idle and prolongs a vehicle's life.
Other inexpensive repairs that can go a long way to rekindling your pride of ownership include clearing foggy headlights, getting a thorough detail and repairing interior rips and tears. New floor mats go a long way toward improving an older car's interior appearance. Additionally, dent removal and paint touch-ups can often be done for just a few hundred dollars.
Buy a really inexpensive used car. While it will require some careful searching, you can still buy a used car for about the amount of your tax refund.While buying a used car for cash helps you avoid a monthly payment, make sure you set aside a budget for maintenance and repairs. They are part and parcel of driving an inexpensive used vehicle.
Pay down an existing car loan. You might consider using your tax deduction to knock down the balance on your existing loan so you are carrying less debt. There are two ways to do that: Make an extra payment or two, or pay down the balance. Making extra payments means you pay off the loan sooner. Paying off the balance will reduce the amount of interest paid over time. If you want to go either of these routes, call your lender and find the best way to proceed.
Choice Auto can help! At Choice Auto, we can help you with any of the above options. We have clean and reliable cars to fit any price range, even cash cars. If you need special financing, we offer a wonderful program that helps you rebuild your credit in just 3 years. We also have a Service Center with certified mechanics that can fix just about anything. Need body work... we know a guy. Give us a call today at (517) 764-7240 to see how we can help. We would love to welcome you to our Choice family.
$25 Gas Card for referring a customer to us! If you refer a friend or family member to Choice Auto and they buy a car from us, we will send you a $25 gas card for each referral. Here's how it works:
Stop in to pick up some referral cards, or call us and we will mail some to you.
Fill out the backs of the cards and give them to family and friends.
If they bring in the filled-out card and purchase a vehicle, we will mail you a $25 gas card.