Use Your Tax Refund for a Bad Credit Car Loan
Prudential Auto Loan: Helping people get the bad credit car loans they need with their tax refund!
Tax season is here and, if you haven't already sent in your tax return, you're probably on your way to doing that, particularly if you're expecting a sizable refund. If you're in a situation where you need to replace your old car, and have bad credit, you might be planning on using that tax refund as a down payment on your next car purchase. After watching this money deducted from your paycheck each month, for an entire year, it's about time to do something useful with the cash the government is giving back to you. After all, it is your money. So, there's no reason you shouldn't use your tax refund for a bad credit car loan.
Bad credit carries a few problems that can impede your ability to get a car loan at low rates. While more people with bad credit are being approved for auto loans than had been over four years ago, the interest rates that can come with a bad credit car loan can make them cost prohibitive. Being prepared to make a sizable down payment can offset higher loan costs for a couple of reasons. A down payment on any sort of loan, historically, cemented the bargain between lender and borrower.
In a car loan, the down payment demonstrates to the lender that you're serious about investing in the car loan. This may then lead to lower interest rates since you've relieved the lender of some of the risk involved in making bad credit car loans. A generous down payment also takes a bite out the balance on which you'll be paying interest. If you're borrowing $20,000 dollars, making a down payment of $4000 means you'll only be paying interest on $16,000 over the term of the loan. The more you can put, obviously, the more money you can save on interest payments.
April 15th presents you with an excellent opportunity use your tax refund to rebuild your credit through a car loan. Although your car loan agreement will cause your credit to dip slightly in the beginning, paying off the loan in a timely manner will substantially improve your credit rating. But, in anticipation of that tax deduction, certain preparers may encourage you to enter into a very different loan agreement to get that money in your hands quicker. A fashionable product among some tax preparers is the Refund Anticipation Loan, or RAL.
Often marketed to low income people, this loan is not like a car loan, but is related more to a payday loan carrying with it very high interest rates. For those who offer RALs, these are treated as high risk, short-term loans subject to interest rates that can go into triple digits. Though the companies that offer these sorts of loans promise that they'll put the money in your hands quicker than you will get them from the government. But, IRS refunds rarely take longer than 10 business days to reach tax-payers from the time of filing. E-Filing reduces that wait even more.
The high interest rates that come with RALs might not make too serious an impact if you receive your loan promptly from the government. But, what if that refund is smaller than you expected, or non-existent? When you agree to an RAL, you agree to borrow an amount of money that your tax preparer estimated you get based on the tax information you've given him. There's no guarantee that your tax preparer is on the same page as the United States Treasury Department, and getting less than you anticipated has some consequences.
With an RAL, the tax preparer hands you your loan check, but the money comes from a bank, or other funding source, with which the lender has a relationship acting as a go-between. Your refund check, however, goes to you, and it's up to you to put that money in the hands of the originator of the loan – with interest. If that check turns out to be smaller than you were expecting, you need to dip into your own savings to repay the loan. And, it's important to repay that loan as quickly as possible because that monstrous interest rate is pushing what you owe higher with each passing week.
When it comes to your tax refund, you only need a little less patience than what should go into your car loan. After all, the insignificant amount of time you save between getting an RAL, and your actual refund check, is just not worth the chances your taking with huge amounts of interest hanging over your head. Besides, why pay some stranger a piece of your hard-earned money to get what's already yours. You ought to be the one to use your tax refund for a bad credit car loan, and not to pay off a bad loan deal from your tax guy.
Prudential Auto Loan is your online connection source for auto financing and bad credit car loans online. If you’re looking to buy a new car with your tax refund, we may be able to help you! Our application process for tax refund bad credit car loans is fast, secure, and, best of all, FREE!