A lot of people plan on buying a car during tax season, after waiting for months to file that return. Maybe you’re one of them, and after patiently waiting for the delivery of your W2s, now you can replace your aging ride – or even by your very first one! The waiting makes car shopping all the more rewarding so go ahead, you’ve earned it. Just make sure you know what you’re getting into and what you should try to avoid!
Buying a Car During Tax Season – The Pros
Using your tax refund as a down-payment
Are you planning to finance your next car? If so, a great way to make the most of your tax refund is to use it as your down-payment. The larger down-payment you can afford, the better. Not only will you owe less, but you’ll also likely see a lower interest rate, and both of those things lead to lower monthly payments.
Pay for your car during tax season
Not everybody wants to finance when they buy a new car. You can’t beat an interest-free cash deal. Your tax return could go a long way in padding your car-buying budget, especially if you’re planning shopping used, and maybe even older, models. There are a ton of benefits to buying used, and one of the biggest is that you may be able to buy that car outright instead of carrying a payment for years to come!
Inventory during tax seasons
You won’t likely be surprised to hear that you’re not the only shopper who is planning to buy a car during tax season. Because you’re not alone, dealerships prepare for a heavy sales season during tax time. That means you can expect to see a lot of inventory, whether you’re planning to buy new or used, because car dealers have stocked up on new inventory and taken in a lot of trades.
Take advantage of incentives & specials
It’s not just the dealerships that are planning for a rush of car buyers at tax time. Car manufacturers are prepared for many people to buy a car during tax season too! If you’re leaning towards a new model, it’s prime time to snag some great deals and incentives!
What to Avoid When Buying a Car During Tax Season
Don’t forget to set a budget
It doesn’t matter whether you’re planning to new or pre-owned. Always start by setting your budget before you shop. Don’t let the extra padding in your account from that tax refund make you overspend either. Carefully consider your available funds, make a practical decision on what you can afford, and stick to it!
And don’t forget to plan for additional expenses
The main reason to avoid overspending is that there’s always more to consider than just your payment or cash payout. When you consider your budget, don’t forget to add in the cost of car insurance, regular maintenance, and the occasional needs like tires and batteries. Estimate what you expect to spend on your car over a year and break that down into monthly payments so you’ll be prepared to save up for the necessities!
Wait until you have the check in your hand
It’s tempting to jump right in and make a purchase as soon you calculate your tax return, especially when you start seeing the ads for incentives and discounts, but it’s always best to wait until you have that check in hand. Any number of things can delay the receipt of your return and you don’t want to be stuck making payments before you have the extra funds in the bank!
Don’t be oversold because of the extra cash
Not to sound redundant, but seriously – don’t let the extra cash lead you to overspend! Car dealers are likely to take advantage of the fact of buyers are a little more flush with cash when they’re buying a car during tax season, so be extra cautious when they pitch you a higher-end model and also when they offer you add-ons like warranties and maintenance plans. Nickels and dimes turn into dollars and it’s easy to let them add up when you have a few more dollars than normal!
Read the fine print on dealership promotions
You’ll see all kinds of promotions when you buy a car during tax season. Some dealers may offer to double your refund, but they’ll likely limit the amount they’ll double. Promotions may only be available on specific vehicles and they may be for limited periods of time. Some promotions seem like complete scams after you read through the fine print so be even more aware than ever during tax season sales. Read every line and ask every question until you’re sure that you’re getting the very BEST deal!