Data provided by the IRS shows there was a total of 312.976 billion dollars in tax refunds issued in 2018. The average refund was $2,825, which was slightly higher (0.3% increase) than the average tax returns from 2017, $2,816. This data is a good indicator of the average returns people will be getting in 2019.
During tax return season it is very common for people to use their tax refunds as down payments for an auto loan. Having some money available to put down for a new car is always helpful because it can lower your monthly payments and save you money in interest charges.
Once you’ve filed your taxes, you will know how much your tax return will be. While you wait to receive your tax return, you’ll have time to find the type of car you want to purchase and compare prices online. After you’ve decided what car you want to purchase, and before heading out to the dealership, there are other things you should explore.
- Calculate how much you can afford: We recommend going online to find an auto loan calculator. These calculators let you change many variables such as; the amount of the loan, the interest rate, and the loan period. Play around with these numbers to figure out what type of monthly payment you would be comfortable with. The recommended car payment should be less than 10% of your monthly take home.
- Consider your credit score and credit history: Whether you are financing a new or a used vehicle, lenders will use your credit score and history to determine if they will finance your loan. As a rule of thumb, those with higher credit scores usually get offered the best rates, but your credit history is important as well. In some cases, if you have a very short credit history, this may affect your rates as well. Use websites such as Credit Karma to monitor your credit score. The average credit score Experian has reported for buying a new car is 714 and 655 for a used Don’t worry if your score is lower than these numbers; you can still qualify for a loan!
- Consult different banks and lending corporations: It’s smart to review the options you have available before going to a dealership. Doing this will give you a good idea of the type of rates you can get before you commit to a loan. In a lot of cases, private corporations can be more flexible and able to offer better rates.
- Understand how your down payment will affect your financing: The average down payment for a car can range between 12% to 20% of the loan. Putting more money towards your down payment can significantly help lower how much you pay in interest and lower your monthly payments.
- Keep in mind other costs associated with buying a car: When you are in the process of applying for a loan and calculating your monthly car payments, it’s also important for you to consider things such as the economy of the car because this will help you calculate how much money you will be spending on gas each month. Other things to consider are the cost of your insurance, car depreciation rates, registration fees, and taxes.
Sometimes banks and manufacturer-owned finance companies are not able to procure loans for people with stable incomes, people working hard to fix their credit scores or people who are just beginning to establish their credit history. If you are looking to use your tax refund money as down payment for a car loan, consider companies like American Acceptance Corporation. Our members have a good track record of opening doors and offering great solutions for those with less than ideal qualifications for auto loan financing.
American Acceptance Corporation is fast, affordable and reliable. Our unmatched customer service and our cutting-edge online services will exceed your expectations. Contact our team for fast credit approvals, after hours availability, and rapid funding.