When You Should Use Your Stimulus Check To Buy A Car

Recipients of the stimulus who are confident in their financial situation (and still have regular income) should feel free to spend what is essentially no-strings-attached cash from Washington however they want. There are a number of ways to use the money to buy a car.

Using Your Stimulus Check to Buy a New Car

If you’re in the market for a new vehicle, consider yourself lucky. Most automakers are offering great incentives to entice customers and ease any potential financial strain. They also want to increase their own vehicle sales, making it an excellent opportunity to buy a new car. The best of these deals include no-interest financing for five, six, or even seven years. Normally, we think that 72-month and 84-month loans are a bad idea. If you stretch out a loan over a long period, it makes your monthly payments less, but that also means you probably can't comfortably afford the car to begin with. Additionally, a longer loan term means there's more time for interest to accrue, meaning you'll ultimately pay more for the same car than you would with a shorter loan.

However, entering into a lengthy loan with no interest accruing is a less risky endeavor. Certain car brands are combining those offers with deferred payments for a few months, or offer forgiveness in certain situations if you can't make your payment. For a comprehensive look at most brands' response to the pandemic, read our articles on car deals and car loan and lease payment programs that are being offered during the coronavirus emergency.

We recommend putting down as much money as you can upfront when buying a car, even though you may be tempted by special low-interest financing offers. A stimulus check of a few thousand dollars for a family goes a long way to meeting the recommended down payment of 20% of a car's value. Check out our car affordability calculator to see how a larger down payment can reduce what you spend on a new vehicle.