Once again it’s tax season. The time when people scurry to file taxes in hopes of getting the biggest refund possible. Many people that have bad credit are going to need a vehicle loan and are wondering how much if any, of their tax return they should use for a down payment. It may be hard to give a blanket answer because their may be a few variables here. First of all, do you have any very important bills that need to be paid? For example, it you mortgage two payments behind and about to be foreclosed upon? If this is the case you should strongly consider using whatever portion of your tax refund toward this that is needed to get you caught up again. If you don’t have anything like this and you still plan to buy a car, I would recommend using most if not all of your refund to use as a down payment on you next car. Of course it would be nice to get a new big screen t.v. but you need to set priorities here. Can a big screen t.v. get you to your job every day? Can a big screen t.v. bring you to the grocery store when you need to get supplies? You can always save up money later for some of those thing but consider this. If you have bad credit, that means you are not going to get the best interest rate. Since you are not going to get the best interest rate, you will pay higher amounts of interest over the period of the loan. If you have a large down payment, will pay less in finance charges because you will be paying interest on less money. If you have a $15,000 balance on a car and put $3,000 at 20% interest you will save almost $2000 dollars in interest charges and have payments that are only $318 a month instead of $397 a savings of $79 each month!

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