Obtaining competitive Honda financing rates requires more than having a good credit score, as it greatly helps to have a strong financial structure for the loan itself. The team at Heritage Honda Westminster understands how a large tax refund can work in your favor to help you obtain the best Honda financing rates. This is an overview of how and why you should apply your tax refund to obtain a favorable automotive financing plan.

Lowering the Loan-to-Value Ratio with a Large Down Payment

One of the primary metrics measured by lenders is the Loan-to-Value, or LTV, ratio, which is a measurement of how much you are borrowing compared to the car’s value. You can use your tax refund as an immediate way to increase your down payment and insert equity into the loan, which lowers the LTV and reduces the bank’s exposure to potential loss. When the LTV drops below a certain level, underwriters are more likely to grant approvals with low interest rates.

Eliminating Negative Equity

If you’re considering trading in a vehicle with an outstanding loan balance that’s higher than its current market value, a tax refund can provide assistance. What’s commonly known as negative equity can sometimes disqualify you from special financing offers or leases and can force you into a high-interest loan to cover the difference. Apply your tax refund to eliminate this negative equity and qualify for the best loans.

Consult Our Honda Finance Team for Personalized Advice

The best way to discover how your tax refund can help with financing is to speak with a Honda finance expert here at Heritage Honda Westminster. We will provide you with individual advice on how to obtain the most favorable rates, boosted by your tax refund. Visit our friendly dealership today!