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As the third round of stimulus checks makes their way into bank accounts across the nation, some Americans are likely wondering if they should use the money as a down payment on a car. We don’t blame them, considering buying a new car right now can be smarter than buying a used one, but there could be better ways to utilize that extra $1,400. It really just depends on your current financial situation.

Do you really need a new car?

Before you head to your local dealership to pick out that car that you’ve been eyeing for the past year, it might be a good idea to ask yourself if you really need a new car. Keep in mind that “needing” something is far different than “wanting” something, and when it comes to cars, it’s easy to have your “wants” overshadow your “needs.”

We’re not financial consultants, so it’s up to you to decide on how you want to spend your money. But before doing so, you can always consider this simple assessment posted by The Simple Dollar:

  • Do you currently have a reliable car to get you where you need to go? If you currently have a car to drive, then you technically don’t need to buy a newer one.
  • Do you have access to alternate transportation? If you don’t have a car, but have access to public transportation, or even a bicycle, to get you to work, then you might want to save your money.
  • Is your actual need for a car sporadic? If your current live/work situation only requires the use of a car once or twice a month, then you might better off taking public transportation or even rideshare to get there.

If you answered “yes” to any of the following questions, then chances are that you might not need to spend your stimulus money on a down payment. Instead, The Simple Dollar advises that you might want to focus that money on high-interest credit card debt or even just saving it for a rainy day.

A 2019 Nissan Motor Co. Rogue sport utility vehicle (SUV) sits on the lot at a car dealership in Joliet, Illinois
The 2019 Nissan Rogue | Daniel Acker/Bloomberg via Getty Images

When should you spend your stimulus check on a car?

As Autotrader noted, the main point of the stimulus payments was to help Americans affected by the pandemic so that they can pay their bills and other necessities during these dire times. However, if your current income won’t be affected by using that money for a down payment, and you really do need a car, then you can spend it as you wish.

In that case, the stimulus payment can act as a complete down payment for a cheaper car or a place to start in order to get up to a 20% down payment for a newer or more expensive one. Either way, just make sure that you’re financially secure first before plunking that money down on the finance manager’s desk.

New Ford dealership pictured.
A new Ford dealership. | Daniel Acker/Bloomberg

If you plan on buying a car, then you could be in luck

If you decide that spending that stimulus check on a car is what you want to do, then the good news is that there are still deals to take advantage of. Many automakers are still offering special finance and lease offers nationwide on new cars, so you should still be able to get a good deal.

First, just remember to take note of where you stand financially in order to make the best decision possible.  


How Much of a Down Payment Do I Need for a Car?