It’s that time of the year. Like millions of other Americans, you’re doing the hard work and preparing to file your taxes. Once your taxes are submitted comes the exciting part, turning your refund into reFUN – on the road.
The average tax refund last year was sizeable – around $3,000 according to the IRS. Whether your tax refund turns out to be more or less than you hoped, there are smart ways to put the money to good use when it comes to your car and auto-related finances.
1. Increase your down payment
Is getting into a new vehicle part of your 2024 plans? Consider a larger down payment, which typically means you’ll need to finance less and could end up with smaller monthly payments.
For example, consider a down payment of $3,000 on a $40,000 vehicle. Using our handy monthly payment finance calculator, if you finance for 60 months at 10% interest, your monthly payment would be about $786. But if you are able to double your down payment to $6,000, your monthly payment drops to just over $722 a month. That’s a savings of $64 a month and more than $768 a year!**
2. Pay ahead on your current account
Depending on your current car loan balance and tax refund amount, you could easily have several months of payments in hand after getting your tax refund. Keep this money saved in a secure bank account so you’ll have the funds available when the loan payment is due.
You could even make additional payments. Although you will still be paying any accrued interest, you can pay off your loan quicker with these additional payments. For convenience, Santander Consumer USA customers can set up Auto Pay so deductions are automatically made by the payment due date.
3. Get your account back on track
If you’ve struggled to keep your account paid in full every month, your tax refund could help get you back on track. Popular payment options include the above-mentioned Auto Pay, online and by phone or mail. (Fees apply to payments made using a debit card or with a live agent.)
4. Upgrade your insurance coverage
Auto insurance is one of the expensive, but necessary aspects to car ownership. Rates can vary depending on a number of factors including location, driving record and vehicle type. Taking a look at your insurance coverage this time of year can help you decide ways to save and allocate funds from your tax refund toward insurance cost for the year.
5. Fix or upgrade your car
With dealership inventory filling up, trading in or buying a vehicle right now may not make sense for you. Instead, maybe the time is right to get the brake job you’ve been putting off or invest in a new set of tires.
6. Pay off your retail loan
Depending on the amount of your tax return and how much you owe on your vehicle, you may be able to pay off your loan entirely. The freedom of cruising around in a car you own outright is definitely fun!
7. Invest in yourself
If you’re in good shape with your auto loan, insurance, vehicle maintenance, etc., then maybe it’s time to fill the fuel tank and head out of town for a relaxing road trip. Whether a weekend jaunt or something longer, put stress in the rearview mirror and decompress.
Road trips are an excellent way to get creative on a budget. Or treat yourself and indulge in a luxurious hotel and fancy restaurant and return feeling refreshed.
* These statements are informational only and should not be construed as legal, financial, tax or other professional advice. Please consult a tax professional for any tax-related questions.
** The referenced calculator and example provided are meant for educational and illustrative purposes only. The calculator estimates monthly payments solely based on the information you provide. We do not guarantee the availability of the illustrated terms or your eligibility for any product referenced. The estimated monthly payments generated from the calculator do not constitute a finance offer.