It seems as though as soon as people find out how much money they are getting in their tax refund, the first thing they do is start thinking about how they are going to spend it… A wise choice might be to make a long-term investment for oneself… and buy a used car or truck.
It’s a simple fact, tax refunds and car loans are a good match*. One of the main reasons is the chance for qualified buyers to use their tax refund for a down payment on a car. The average income tax refund in recent years has been around $3,000, and buyers may decide to use all or part of that check as money down. The Consumer Financial Protection Bureau tell us that a down payment may help when purchasing a vehicle because lowering the amount of money that needs to be borrowed may also lower the monthly payment and the total cost of financing.
Here’s why we think this could be a great idea for you!
Affordability: Generally speaking, with a used vehicle you’ll get more bang for your buck than you would by purchasing a brand new one – you are paying a lower purchase price for the same car model used rather than new. Someone else already took that big depreciation hit, so you are more likely to get a car and maintain value!
Lower Long-Term Costs: Typically, when you purchase a used vehicle, monthly interest rates on a car loan for a used car will be lower, resulting in a lower monthly payment. In addition, your insurance rate on a used car is likely to be lower than on a new car.
Reliability: Today’s cars, trucks, SUVs and vans last longer than they did 30 or 40 years ago. In 2015 (2 years ago!), IHS Automotive reported that the average car driving on American roads had reached a record high of 11.5 years of age. The auto industry think tank also predicts that by 2020, the number of 12-year-old vehicles still in operation will rise by 15 percent. Modern vehicles are built to last longer than ever, which means you can save thousands and expect a long service life from a used car.
So now you may be wondering how to use that tax refund towards your used car or truck purchase… well, here’s a quick step-by-step guide that will help you drive away in your new pre-owned vehicle.
1 – Get your check from Uncle Sam.
2 – Calculate what you can afford.
3 – Decide whether you would be more comfortable with applying your tax refund as the down payment or using it to cover monthly payments.
4 – Identify what you want and what you can afford within your budget.
5 – Visit your local dealership to look at and test drive vehicles. Most can help you with financing as well.
6 – Sign on the dotted line and drive away in your car or truck!!!
Beach Auto Brokers has been in business since 1985, Driven by excellence and proudly serving the Hampton Roads community for over 30 years. The Beach Auto Brokers full inventory of vehicles is available for you to look at, test drive, and ask questions about. And our knowledgeable staff is ready to help you. And while you’re here, we’ll take a look at your current vehicle and tell you what it’s worth – on the retail market and the trade-in value.
* These statements are informational suggestions only and should not be construed as legal, accounting, or professional advice, nor are they intended as a substitute for legal or professional guidance. Please consult a tax professional.