While dealing with taxes in general may lead to stress and worry, the anticipation you feel towards receiving your annual tax refund can on the other hand, be an exciting time. As you dream and make plans about how you can spend or save this money, there are likely to be a wide selection of financial options that come to mind
Of course, how you will use this money will ultimately depend on the amount of money you are expected to receive. If you are anticipating a big tax return this year – one viable option for these funds could be to use towards a down payment for a new vehicle. Maybe you have been biding your time and trying to save for a car for a long time and this can be a great opportunity to do so and to finally put your car purchasing plans into motion.
Save on Overall Vehicle Costs – Upfront and Long-Term
One main advantage to using your tax return income as a down payment, is to help assist with the overall costs of car ownership. While, you can expect to have upfront as well as ongoing costs associated with owing a vehicle, such as the down payment, the loan payments, insurance, fuel, maintenance, etc. – it is a good idea to start things off on the right foot where the down payment is concerned. If you can add even a little bit more money to your down payment amount, you can help save yourself some money each month and each year. The amount you will save from not having to pay high monthly car loan payments can allow you to use this additional money for other ongoing-related vehicle costs.
Keep on Top of All of Your Monthly Expenses
If you have been saving for a down payment, or you simply have not been able to for a long time, yet you need a vehicle sooner rather than later, this refunded money can be a great service to you in your time of need. The fact that you do not have to scrape and save every bit of additional money you have, while perhaps placing other important payments or expenses on hold so you can save for your car, can also mean that you can manage to stay on top of all of your other monthly payments and bills. Ultimately, the higher your down payment, the less you should expect to pay each month on your loan and you can then manage these financial responsibilities with a higher level of ease.
Rebuilding Your Credit
Typically, one of the biggest concerns for loan borrowers is having bad credit. This often means that they may not be able to access the loans they need. If you are in this position, yet still need to go ahead and seek out a car loan, fortunately these days there are alternative credit sources who can help you. While this reality can certainly alleviate your worry about obtaining vehicle financing, your next worry may be that on top of you car loan payments, you may find it more challenging to meet your other financial responsibilities.
Of course, this worry can lead you to be concerned that your credit rating may take an even steeper decline. Once again, with that being said, if you can use your tax return to pay for your car’s down payment, you can secure a more favourable loan, in addition to keeping up with your other financial burdens. Ultimately, by being able to make your monthly payments with ongoing success, you can also begin to rebuild your credit score and improve your finances all at the same time.
Upgrade to a More Expensive Model
Lastly, if you already have some savings to put towards your vehicle and have a long term plan for how to manage your car payments and expenses, using the supplemental tax return income could also mean that you can purchase a more expensive vehicle. If the car you have your heart set on goes for a higher sticker price, then your monthly loan payments and the size of your loan is likely to be that much higher as well. With a larger down payment upfront, you can minimize the amount you owe in total, not to mention lowering your ongoing monthly payments.
These are all great reasons for using the sizeable amount of money you are expecting back from your tax return this year. Regardless of your situation or your vehicle needs, you can ultimately decide if one or more of these scenarios makes sense to you and consider using your tax refund to purchase a new car at that time or in the near future.
Who can you turn to for Help in Getting a Car Loan?
Canada Drives can assist you with connecting you to a lender to obtain a vehicle loan that can match your financial needs. If you have bad credit and do not believe you will be approved through a dealer or a traditional bank, contact us so we try to connect you with a loan provider who can. In addition to using your tax return to help with the overall cost of your new car, these funds can also help make your loan payments even more manageable and as a result. Contact Canada Drives so we can help you reduce the stress that can be part of the car purchasing process. It is our goal to connect you with people who can provide you with a loan and lift your spirits as you drive off in your new vehicle.