Down Payment vs. Monthly Payments: What’s the Smarter Use of Your Tax Refund?

Are you expecting a large tax refund? You can use your refund to make a sizable down payment on a new car or save it for your monthly payments. Rick Weaver GMC shares which option is a smarter use of your tax refund.

Benefits of a Down Payment

Experts generally recommend that you make a down payment of at least 20 percent when you purchase a new vehicle. A large down payment with a tax refund can help to offset the initial depreciation of a new vehicle, which can help you avoid gaining negative equity on your new vehicle. Plus, it reduces the amount of money you need to borrow, so you’ll end up paying less interest on your new vehicle. This will help you save more money in the long term.

Saving for Monthly Payments

For some buyers, it may make more sense to save your tax refund to use towards your monthly payments instead. This is a great way to ensure you’ll always have the funds to make regular, on-time payments, which can help improve your credit score. You also have the option to make larger payments, so you’ll be able to pay off your new car faster. Saving your tax refund for monthly payments also gives you more flexibility if you need to pay for service down the road.

Shop Our New Cars for Sale in Erie, PA

It’s important to review your personal needs and finances to decide which route is right for you. Whether you use your tax refund as a down payment or save it, a tax refund goes a long way on a new vehicle purchase. We have a vast selection of new vehicles to choose from at our dealership. Visit Rick Weaver GMC to shop today!

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