Is it time that you upgraded your vehicle? If you’re in the market for a new car,tax time may be the best time to make your purchase.This time of year,usually means getting a sizeable refund and you can use all or part of the money to make a substantial deposit on a vehicle.
The United States Inland Revenue Service reported refunds averaging $2777 per person in 2016.This will most likely be enough to make the usual ten per cent deposit on a new car. If you make this choice, you will not be alone. Many people spend their tax returns on major purchases like vehicles.
Prime buying season
In fact, MarketWatch reports that some car dealers say they make almost half of their total used car sales for the year between February and April. Editorial director for used-car pricing guide Black Book, Ricky Beggs said some buyers use their refunds to put a down payment on a loan for a new or used car while others buy used cars outright. If you’re in Australia and in the market for either a new or new-to-you vehicle, check out dealers like Adrian Brien.
There are good financial reasons for making a sizeable down payment. According to the Consumer Financial Protection Bureau, the bigger the down payment, the less you will owe. A larger deposit canalso reduce your monthly payments as well as the total sum you pay in the long run. In addition, it reduces the likelihood that you will owe more than the vehicle is worth when its value starts to depreciate.
Plan your purchase
Once you know just how much you are getting back from government, calculate how much you can afford to spend on a vehicle. At this point you can determine whether you want a new or used vehicle. It is worth bearing in mind that while a second-hand car will be cheaper to purchase, it may need costly repairs later depending on its age and mileage.
Online loan calculators will help you to properly analyse your budget.While using the refund to make a down payment is an obvious choice, you can also consider whether you would rather split it into monthly payments over a longer period of time.
Leasing an option
If you want a higher priced new car but can’t afford to buy it outright, leasing may be an option. You can also use your income tax return for this. Leasing allows you make lower monthly payments while having the option to return the car after a couple years. As is the case with purchasing, starting a lease with a large down payment will significantly reduce your monthly pay out. Some leasing companies allow you to extend the arrangement on a month to month basis at the end of the term. If this is something you may be interested in, you can ask your provider if they offer it.
Many people look forward to tax season because it’s one of the most sizeable refunds they will get all year. It is no surprise that many use it to help with major purchases like vehicles. It makes a lot of sense to use yours to buy or lease a vehicle if yours is already on its last legs.