You got your W2s, you filed your taxes, and your tax refund is on its way! Are you wondering how to spend it wisely? If your ride could be more reliable, or more comfortable, you may be thinking of investing your hard-earned refund into your wheels. There’s more than one way to spend your tax refund on a car.
1. Get a new (or new to you) car using your tax refund.
We’ll start with the obvious: There’s a reason why you see so many ads (TV, direct mail, radio, newspaper, etc.) during tax time urging you to visit the nearest dealership with your tax return in hand. A lot of people buy a new, or new-to-them, car this season. If you feel like your current vehicle is down to its last few miles, or if you’ve just been saving your pennies to upgrade, shop for a car during tax season!
2. Put your tax refund towards an existing vehicle loan!
If you’re not ready for a new ride, you can put your tax refund towards your current car by paying off its loan. There’s nothing quite like the feeling of paying that baby off. You won’t miss that monthly payment one bit, and you’ll free up a lot of dollars for other needs, or for padding your savings account.
3. Refinancing your car with your tax refund.
Not every financing deal is a good one. Sometimes, you must take a higher interest rate if you can’t afford a pricey down payment. Small down payments and less-than-stellar credit can lead to higher interest rates when it comes time to apply for an auto loan. If you’ve been plugging away at payments and still have a lot more ahead of you, you might want to consider refinancing. Using your tax return as a hefty down payment on an auto loan refinance could help you save in the long-run (and the short-run, if those monthly payments go down). It’s a great way to get a little help from that one-time tax check every month!
4. Make a down payment with your tax refund.
According to one study, it’s wisest to have at least a $1,000 down payment when you lease a new car. Fortunately, if you’re planning to spend your tax refund on a car, you may be able to put down even more than that. A bigger down payment means lower monthly payments. In addition, if you extend your lease past its original terms, you might be able to extend your affordable payments as well. Read your contracts carefully and do plenty of research to make sure you’re making a sensible down payment!
5. Use your tax refund for aftermarket upgrades.
Maybe you already own your car outright and you want to shop around for a new one. If so, congrats! It’s a great feeling to own a car you love! 🙂 If you’re lucky enough to be in that position, a great way to spend your tax refund is by upgrading your car! There are tons of aftermarket upgrades for all types of cars and trucks and the right ones can even increase the value of your car. So go ahead and look into those wheels, sound systems, cargo racks, and window tints you’ve had your eye on!
6. Spend your tax refund on car repairs.
Sometimes tax season rolls around when you need it the most. A lot of people struggle with the cost of unexpected repairs. If you’re one of them, that refund check will come in handy. Not everyone needs a new car or a lot of fancy upgrades. Some people just need to get their car back on the road and running smoothly. Even if you haven’t had any major issues, it’s still a wise investment to have a mechanic give your car a good once over and offer you some preventative maintenance options.
7. Pay for your car insurance upfront with your tax refund!
Last but certainly not least, a great way to invest that tax refund is by purchasing or renewing your car insurance. There are a lot of benefits to paying up front instead of making monthly payments, including peace of mind, no premiums, and extra dollars in your monthly budget. If you want to know more about payment options, contact The General! We’re here to help! Looking for an affordable policy? You can get a free car insurance quote in under two minutes. If you like these tips, read more about car buying on our blog.