5 Reasons Why Buying a Car During Tax Season Could Be a Good Idea
For many, tax season means one thing: getting a hefty refund. Consumers sometimes use the money to make large purchases, such as cars. But what’s good about car buying this time of year specifically? Here are five reasons why purchasing a vehicle during tax season might be beneficial.
1. Dealerships want to get rid of their winter surplus
Winter is often the slowest time of year for car sales. So dealerships are usually willing to offer discounts and deals to make room for new inventory. That means you could find great car deals during tax season.
2. Tax season = sales on cars
Dealers know consumers have more cash after receiving tax refunds, so they offer specials to entice shoppers. “You’ll often see tax sales popping up toward the beginning of April,” according to Auto Bank Kansas City. “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.”
3. You’ll have the money for monthly payments
Because most people receive a tax refund, it makes sense to use the extra cash to purchase a car. By putting aside some money monthly leading up to tax time, you can take advantage of these offers while still having enough left for the down payment and monthly payments.
4. You’ll have time to plan for sales tax for the next tax season
Sales tax can be significant on large purchases like cars, so planning is crucial. By taking advantage of specials during tax season, you can spread out your costs over multiple years by using estimated taxes — meaning you won’t have as much due at once when filing your return next year.
5. Lower interest rates usually happen during tax time
Interest rates on loans tend to be slightly lower, about 1% to 2%, due to economic activity involving filing returns and other seasonal trends. That means it might be the right time if you need financing to purchase a vehicle.
Is buying a car during tax season a good idea?
If it’s financially feasible, yes. Tax season is an ideal time to buy a new car due to discounted prices and lower interest rates. Still, you must consider factors such as sales tax and loan terms before making significant purchasing decisions. You’ll also need to calculate whether you can afford a new vehicle regardless of the amount of your tax refund. However, if you plan wisely, buying a car during tax season could be a good idea.