Tax season is here. Sitting down and actually doing your taxes can be a daunting task and is a lengthy process for many Americans but the yield can be beneficial: your tax refund. Who doesn't want extra cash in their bank account? Better yet, what do you plan on doing with that extra cash?
The average amount for refunds last tax season was $2,650 and this year it's predicted to be around $3,000. A large percentage of these refunds are used as down payments on a new car. Using your tax refund as a down payment on your car can be a smart financial decision and can actually be beneficial for you.
Having a significant down payment on a new car, such as using your tax refund, can mean lower monthly payments. If you were to buy a $20,000 vehicle while putting down an average refund down of $3,000 at an average loan rate of 3% APR for a 6 year loan term, you could save $48 a month! Thats a $258 monthly payment with a down payment versus a $304 monthly payment without one!
The more you add to your down payment, the more affordable your monthly car payment will be.
By making a larger down payment, you can save money on interest charges. This allows you to finance your vehicle for a shorter term. Interest charges can easily add up. If simple interest were to be calculated on the described loan above, you would pay:
With Down Payment-$3,060 Without-$3,600
Your down payment can save you up to $540 in interest charges!
A larger down payment can also mean you could afford a more expensive vehicle or that upgraded trim level.
These are just a few beneficial reasons for using your tax refund as a down payment on a new car and how it can actually save you money over time.
Everyone's situation is different depending on credit score and income but putting a down payment on a new car purchase is the smart way to go.
Gillman Nissan Rosenberg is proud to serve Katy, Sugar Land and Houston with the best selection of Nissans.
Come see our Nissan lineup at Gillman Nissan in Rosenberg or you can shop online! Feel free to contact us with any questions
Categories:
Finance