It’s that time of year when many of us are eagerly waiting our tax refund from the government. After you’ve worked all year, it is nice to know that some of the money that was deducted is coming back to you. The average tax refund is around $3,000.
Here is how your tax refund helps with your Honda purchase
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Your tax refund can act as your down payment
Whether you are purchasing a new Honda or a used Honda for getting around the greater Macon or Covington area, it is a smart decision to put some money down on the car to help lower your monthly payment. If you are in the position of having to purchase a new car and you weren’t planning on it, using that tax refund can be a huge help.
2. Using the tax refund may help you get a better loan
Creditors like to see a small amount of a down payment. This is especially important if your credit is not the best. It may help you get approved for a loan if you have the down payment to show credit worthiness.
3. If you have an existing loan or lease you can pay it down quicker if using your tax refund
Let’s say you have a $3,000 tax return. If your auto loan is $600 a month, that’s five month's worth of payments! If you put it towards your loan, that is more money going to the principal balance instead of towards the interest, so you’ll pay off your loan sooner. Or if you lease, you can use that money towards lease payments freeing up future funds for other things.
4. You can use your tax refund for repairs too
It is never recommended that you defer any sort of maintenance on your Honda. But life happens and perhaps you have not been able to have the brakes replaced as soon as you would have liked. Use the money from your tax refund to do this.
5. Prevent negative equity
You have negative equity when you are "underwater" on your auto loan. This happens when the amount you owe on the car exceeds its current worth. Paying more into your loan helps you stay above water. Why does this matter? In the event of an accident when your car is totaled, the insurance company will compensate you according to the car's value rather than the amount you owe on it. You will then have to pay the remaining amount out of pocket while looking for a new vehicle. In such a case, having paid more into your loan, the depreciation is far less than it would be had you only been making minimum monthly payments.
We're Always here to help you at Buter Honda in Milledgeville near Macon
It's not always as easy to navigate the car-buying process. Along the way, there are a lot of financial factors to and other decisions to be made. Don’t hesitate to contact us to help with financing or to take a test drive of a new or used Accord, Pilot or other Honda vehicle you have your eye on.