It’s the first part of the year and you just saw your tax return hit the bank, It’s a good chunk of change, but it’s not enough to replace your car with a brand new Maserati. So where do you start? Here are a few tips on how to use your tax refund to get you started.
How much car can you afford?
Whether you’ve saved a few dollars every month from not having a car payment, or you just received your tax return, odds are that you can afford more car than you think. That down payment will go a long way to dropping the principle for a car purchase. A $10,000 car at 5% interest will run you $230 a month, and when you put the average tax return of $3,000 towards your car, the monthly payment drops to $161. That’s almost $70 a month difference!
Choose a Car Within Your Means
Make a list of the cars that you feel are within your means. Services such as Kelly Blue Book or Edmunds can help you find the buying and selling prices for the cars within your price range. Values may vary greatly depending on model year or package type. Don’t forget that choosing a smaller size engine will not just save you money on the sale, but also insurance and gas.
Using your tax return to buy a car is a smart investment. Replacing a car that has been nickel and diming your bank account every month saves the hassle of dealing with the mechanic shop, and keeps you safe on your way to work, the grocery store, and around town. Safe Travels!