What NOT to do with your tax refund

You just finished filing your taxes and sent them off with the joy in your heart of looking forward to your tax refund. Getting that check in the mail is important to you. It’s your money. So you are now wondering to yourself of all the things you could potentially buy with this? We’ll tell you why buying a car with your tax refund might be a bad idea.

There is one thing that we all can agree on. Buying new things, especially a new car, can be really exciting. Sitting in that fresh car smell and driving it out of the lot might be a daydream for a lot of us, but spending our tax return money on a fancy new car is most likely not a great idea.

Before you buy a car there is always a financing process. Unless you have the money to drop on a car without taking out any loans, buying a car requires a down payment and loan payments afterwards. The big difference between buying a car at any other time of the year, and buying one with this refund in your pocket, is that you might fool yourself into buying a more expensive car because you can afford the down payment.

This is the big mistake. Sure, buying a car with your tax refund can be a great idea, but spending more than you can afford to make payments for is a definite no-no. Look at how much you make each month, and figure out how much you can spend on a car and pay off each month accordingly. You don’t want to end up in a situation where your tax refund is gone and you can’t make your loan payments.

The best method of buying a car is pretending that you don’t have the extra cash from the refund and then purchasing a car just based off how much you make in a normal month. Then use the refund for a down payment once you’ve chosen a sensible vehicle.

Here at Palmen Dodge Chrysler Jeep of Racine, we want to get you into the perfect car for you. We are here to help you finance and choose the car that fits your budget and needs. Contact us if you have any questions, or schedule a test-drive here.