How to Use Your Tax Return to Buy a Car
Although many people consider the winter holidays the “most wonderful time of the year,” those that are expecting to receive a generous tax refund might feel otherwise, excitedly anticipating the arrival of tax season. In general, when you make your selections for the amount of income tax you will have deducted from your paychecks, the goal is to estimate the required amount as closely as possible, without going too far under or over. If you planned correctly or even if you overpaid your taxes, you are going to be far happier, because a refund check is headed your way.
So, how should you use your tax refund money? While some people may choose to have a blowout shopping trip or plan a tropical vacation, there is a much smarter investment you can make, one that you will reap the rewards of every single day. Using your tax return for car purchase funds is a wise move, for a number of different reasons. With the average person receiving anywhere between $2,500 and $3,200 in refund cash, that money can make a significant dent in the purchase price of a quality pre-owned vehicle.
How can you use your tax refund towards purchasing a high-quality vehicle?
In order to understand how your tax refund will help you with your next vehicle purchase, you have to do a bit of math. Imagine that you have your eye on a vehicle with a purchase price of $10,000, but the monthly payments on a $10,000 loan work out to more money than you’ve budgeted for. If you had a $3,500 in tax refund money in your pocket, you could use it towards a generous down payment. This would reduce the loan amount you would need to finance for your vehicle, which would result in lower monthly payments.
A tax return car purchase can also help you get a vehicle that is higher quality than one you might normally budget for, something a little nicer than you might be able to afford without the extra cash. So, not only will you be saving money on a monthly basis, but you will be enjoying a vehicle you truly love.
How much of your refund should you spend?
The answer to this question depends largely on your personal financial situation. Consider the amount of savings you currently have, not counting the tax refund money. In any situation, whether you are purchasing a vehicle or not, having an emergency savings fund is important. If you do not have any money currently in savings, set aside a small portion of your refund before putting the rest towards a vehicle. However, if you are already prepared with a comfortable savings cushion, you are able to spend more or all of the refund money.
Should you tell the seller you have tax refund money?
Telling the seller that you have refund money to spend won’t be of any benefit to you, and if anything, it will simply make the seller think that you have extra funds to burn. Keep the refund to yourself throughout the negotiation process, and then bring it up once you’ve reached the financing stage.
Should you use a refund anticipation loan?
Much like a payday or cash advance loan, a refund anticipation loan is a risky choice that should only be used in absolute emergencies. Taking out one of these short-term, high-interest loans based upon the amount you are expecting to receive is a gamble that you don’t want to make if you can avoid it. Plus, the long list of fees that come with these loans will burn through your precious refund cash. If it is at all possible, wait for the refund money to be in your pocket.
Should you start looking for a car before you receive the refund?
With any big purchase, doing your research will only make you a smarter shopping. You can get an idea of vehicles available in your price range, decide your must-have features, and narrow down your list of makes and models. Then, once you have your refund money, you will be more than prepared.
Bring your refund money to a dealership you can trust.
Anytime you are looking to purchase a vehicle, working with a trustworthy, knowledgeable dealership can be the difference between a positive experience and one in which you feel like you were fooled into a bad deal. At Reliable Auto Sales in Las Vegas, Nevada, We are the Home of the Lifetime Warranty engine and transmission coverage so your vehicle is covered for as long as you own it. and our team is committed to providing customers with a pleasant car-shopping experience that they can feel good about.
Like you, we all have budgets and families of our own, so we understand how important it is that our customers get a good deal on high-quality vehicles they can count on. Browse our affordable inventory of pre-owned vehicles today, which you can test drive anytime at our dealership.
Contact our team when you are ready to put your tax refund money towards a car you will absolutely love.