Why You Should Buy a Car during Tax Season
Taxes are one of the most frustrating parts of being a working adult. They require hours out of your life, and it can be stressful to gather all the necessary paperwork that goes along with filing for a tax return. Then, there’s the stress of not knowing whether or not you’ll owe money. However, there is one part of tax season that most tax-filing adults look forward to - the simple, glorious tax return.
Tax season is one of the best times to buy a car for many reasons.
Tax returns aside, auto dealers and buyers alike use this time to take advantage of a new tax year and temporary increase in cash flow.
Maybe you’ll get lucky and end up being one of those people who gets quite a bit of spare cash after filing your tax return. Instead of wasting your money on things you might not need, consider an affordable and responsible investment like a used car from a buy here pay here dealership. You can’t beat tax time, and you’ll thank yourself in the future.
Reason #1 to Buy During Tax Time: Car dealers are looking to get rid of their winter surplus.
At the end of the previous year, car dealerships take a risk and buy new inventory. For traditional dealerships, this means loading up their stock with new inventory with the intent of selling the latest goods. However, if the most recent products turn out to not be to the liking of customers, they might find themselves with a surplus.
Even if that isn’t the case, the later in the year and the longer a car dealership holds onto a car, the less likely they are to sell that car down the line. Therefore, they take advantage of sales times during the year to get rid of their winter surplus and begin considering their winter sales again. Tax time is one of the busiest times of the year for car dealerships. It allows them to sell off their cars as well as giving car buyers the incentive to use their tax dollars.
Reason #2 to Buy During Tax Time: Tax season often means sales on cars.
All car dealerships have their own sales schedules, but most follow a fairly predictable schedule. Tax time is one of those times. According to Turbo Tax, nearly 25% of Americans wait until the last two weeks of tax return season to file their tax returns. Even more people wait until a month before, which means the majority of people submitting their taxes don’t get their tax returns until the end of tax season.
Car dealerships see this, and they supply the customer with reasons to come in and spend their tax dollars. You’ll often see tax sales popping up toward the beginning of April. For those who waited until the very last minute to file, Memorial Day marks the end of the tax return season and is a perfect time to spend money on a new car.
Reason # 3 to Buy During Tax Time: You have (or will have) the extra money for down payments or monthly payments.
Even if you were planning on purchasing a car before you got your tax return, your tax return can still help with the purchase of a new car. If you’re the type of person who plans, you can use the additionally money to put toward the down payment you intended on paying on your car. This will lead to lower payments over time.
If you know you can make monthly payments but might not be able to afford a full down payment, a tax return is usually enough to make a down payment on a reliable car.
Reason #4 to Buy During Tax Time: You will have plenty of time to plan for sales tax for the next tax season (should you need to).
If you plan on purchasing from a private seller over a dealership, you’ll need to keep sales tax in mind. The person purchasing a car is always liable for sales tax, and forgetting this can lead to issues down the line. Luckily, if you buy outright during tax time, you’ll have close to a full year to set aside taxes for the sales tax on your car.
To avoid sales tax issues further down the road, or to not have to worry about them at all, work with a car dealership, like Auto Bank. You still have to pay sales tax on vehicles, but usually, dealerships help you figure this out upfront. They work sales tax into the full price, meaning you don’t have to do the math yourself or end up paying a large sum later on down the road.
Reason #5 to Buy During Tax Time: Lower interest rates happen during tax time and often are lower than any other time of the year.
Interest rates are often the bane of car buyers’ existence. They can severely alter what you expected to pay over the long term, and can even make your dreams of car buying moot after a long search.
Low interest rates are a significant part of the car purchasing process, and you can often find interest rates up to 1%-2% lower during tax time than during any other time of the year. This is especially beneficial to those who might not have a squeaky clean credit history. Those with lower credit scores can fall victim to high interest rates. Therefore, it’s essential if your credit history is shaky to do your homework and buy at times when credit rates are optimal for you.
Auto Bank wants to help you use your tax return in the most efficient way possible. If you live in Kansas City, Liberty, Parkville, or Gladstone and need a new car, start making a plan. Commit to setting aside your tax return for a vehicle and make an appointment with us to learn more about the cars we sell and what we do here at Auto Bank. Tax season is still a ways away, but it’s never too early to start thinking about your future.