Should you Use your Income Tax Refund to Pay Debt or Buy a Car?

Should you Use your Income Tax Refund to Pay Debt or Buy a Car?

Posted by on Apr 19, 2022 - Archived under Uncategorized

This is a question that many Canadians are asking themselves; they are getting an income tax refund and are looking to put that cash to good use.


For example, you could use it to pay down some high-interest debt or consider using those funds as a down payment on a new vehicle.


Unless your current vehicle can last a few more years, you should seriously consider buying soon with your income tax refund as a down payment.


Car prices are climbing, along with everything else


Covid has caused a dramatic spike in the retail prices of both new and used cars; these prices are going to continue to rise so long as inflation is over 5%.


The Bank of Canada is trying its level best to slow inflation, but it can only achieve that goal by jacking up the prime interest rate.


Interest rates are going to climb by 50 basis points and maybe more each time the Bank of Canada meets.


This does not sound like a big number, but it is massive when you look at it on the macro level. All types of credit are going to become more expensive.


Higher interest rates + higher car prices = less money in your pocket!


The typical new car will easily cost you $50,000, and the prices of used cars are not far behind.


As the conflict in Europe adds even more uncertainty to the global economy, inflation is going to drive up car prices and overall inflation until it is resolved.


If you wait too long, you will be entirely priced out of the market! Especially if your credit is less than perfect or your income is hard to verify.


How to get a Kitchener car loan with sub-optimal credit


If you have credit challenges, you are not alone. A little over half of all Canadians are just $200 away from economic catastrophe!


While having credit issues does not mean you are bad with money, it will end up costing you more interest over the long term.


The minimum credit score needed to get a prime interest rate car loan is 680+, but you can still get approved with a 600-credit score.


Even if you have significant credit challenges, all is not lost. There are options available, but you cannot find them online.


Your best bet is to work with a local dealership that has extensive knowledge of structuring car loans.


These dealerships also have a vast inventory of cars for you to choose from; this saves you a tremendous amount of time.


The dealership will shop around the entire Canadian market to find you the most competitive car loan terms.


They also have credit experts who can show you what steps you must take to rebuild your credit.


With rising interest rates and car prices, no one can afford to delay buying a car. However, if you continue to wait, you might find yourself completely priced out of the market, so do yourself a favour and contact your local dealership right away; it will be the best decision you made all week!


Fill in the form below to get approved for your next car loan, using your income tax refund as a down payment! we have a team of credit specialists ready to help you with find a car suited to your needs and will work with you no matter your credit score. 


For any questions or concerns, please don’t hesitate to contact us here! 


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