If you're anticipating a substantial tax refund this year, you may be making plans to buy that new car that you have had your eye on. But if you have any unpaid debt, you may want to hold off on that vehicle purchase until your finances are in better shape. Investing in your credit could save you a lot of money down the road.
Try to Think in Terms of the Big Picture
The temporary rush that you can get from throwing down the entirety of your refund in order to drive away in your dream car may be exhilarating, but the excitement generally wears off well before the vehicle is fully paid for. And if you're adding this debt to existing debt, you could be setting yourself up for troubled times ahead.
Improving Your Credit, Could Save Money?
Have you ever heard the saying, "It takes money to make money?" You may find that using your tax refund to pay off high interest credit cards or an equally draining debt right now will save you a lot of money on a future car purchase.
- Paying down credit card balances while you have extra cash may save you from delinquency. Paying down those cards while you have the means to do so may come in handy if an unexpected financial crisis happens down the road. And keeping your credit safe from delinquency will save you from higher interest rates in the future.
- Getting rid of debt will make reduce your debt to income (DTI) ratio. Having a lower DTI may mean getting a much better loan rate when you do decide to purchase a vehicle, and this could save you thousands of dollars over the life of a loan.
- There's nothing like the feeling of freedom. While paying bills may not be as initially enthralling as buying a new car, you will eventually enjoy not having to routinely spend a chunk of your regular income on debt repayment. And when you do buy that new car (maybe next year), the experience will be all the more satisfying because you will know that you are making a thoughtful, planned and responsible purchase.
When a Car isn't a Choice, but a Necessity
If, on the other hand, you are desperate need of transportation, using your tax refund as a down payment on a reliable vehicle may be the best choice. If you fit this description, Auto Credit Express can help you to get the best financing possible, no matter what your credit looks like.
Our trusted network of lenders is willing and able to work with your situation to get you approved. To get started today, just fill out our fast and secure online application.