What To Expect When Car Financing During Tax Season

If you’re considering buying or financing a car during tax season, you’re not alone. Car dealerships and customers alike use that time to take advantage of the relatively improved cash flow that comes with tax returns. Because dealerships understand customers may want to invest in a new car during tax time, inventory opportunities and other advantages may be available during tax season.

Many consumers use the financial boost from a tax return to cover their current car payments or to start a new one. Depending on your tax returns, you may be able to use your extra income during tax season to finish up payments on your car or start investing in a new one. To help you stay prepared, here are a few things to expect when car financing during tax season.

What Are the Benefits of Financing a Car During Tax Season?

“Mercedes-Benz E-Class” by Ildar Garifullin via Unsplash

One benefit to financing your car during tax season is that you have both a higher income and lower prices, more so than the other times of the year. Car dealerships help buyers invest during tax season by creating sales and saving opportunities for those who are in the market for a new car. You may also want to finance your car because of the change in interest rates that occurs during tax season. Interest rates can affect the payment requirements of your car. They may even make the difference between a purchase inside or outside your comfortable budget range. 

Interest rates are an important part of the car purchasing process, and during tax season, you can find interest rates lowered down to 1% or 2% less for new purchases. No matter your credit score, you can still benefit from tax season by taking advantage of the lowered interest rates and sales combined.

What Should I Expect From Car Dealerships During Tax Season?

When it’s time for tax season, there are a few things you can reliably expect from car dealerships that may make you want to invest in a new car or payment plan. Car dealerships may want to help potential investors ease into making a payment plan for a new car or improving the one they already have. Because tax season provides more capital and flexibility for customers, car dealerships may see an increase in inventory. This can be because they’ve accepted many trades, giving customers discounted rates for new cars for their old ones. 

During winter seasons, many car dealerships may also buy extra inventory in anticipation of winter season sales. After the holiday season is over, extra inventory may still be present and ready to sell into the new year, which is right around tax time. The longer a dealership has a car, the less likely it can sell that car for full price. This means that dealerships want to deplete their winter stock as soon as possible, further encouraging them to hold special sales when customers have more capital to spend during tax season.

Dealerships also have schedules for sales based on when they can get their customers to buy more easily. Tax time gives dealerships an opportunity to encourage sales by offering discounts for trade-ins, as well as heavily discounted new car plans. Because they understand that customers have more money to spend during tax time, they create a schedule that customers can recognize and consider each year. The more that customers recognize this trend, the more a dealership may gain in new sales from having relatively predictable discounted prices.

How Should I Prepare When I Want To Use My Tax Return for Car Payments?

One way you can prepare to use your tax return on car payments is by waiting until you receive your tax return before making a purchase. While it may be good to plan your purchases according to what you think your tax return may be, making a purchase only with the money you have right now can help you remain financially prepared. 

You can also prepare for a financial investment with your tax return by planning your budget according to your car payment situation. For example, if you’re planning on using your tax return in the new year to begin a payment plan on a new car, planning a budget in the months before the new year to help compensate for any differences between your actual tax return and what you estimate.

Another way you can prepare to use your tax return on a car investment is by preparing extra capital for sales tax. If you plan many months ahead before tax time, you’ll have plenty of time to consider sales tax for your purchase or plan and how much more capital you’ll need to manage your dealership purchase. You can also choose to buy a car outright during the tax season and use the full year ahead to set aside taxes for the sales tax on the car. 

Another way you can help yourself manage sales taxes is by working closely with the dealership as you set up your purchasing plan. You may get a better sales tax estimate from the dealership, which can better help you calculate your capital needs as the year progresses. Working closely with a dealership concerning your purchase can help you determine if you’re financially able to handle the purchase this year or what steps you need to take in your budgeting plan to make the purchase work.

Now that you know what to expect when it comes to purchasing a car during tax season, why not consider what you can save? North Coast Auto Mall has great options in inventory every season that you can look through today. If you’re considering selling or trading in your car for something new in tax season, consider North Coast Auto Mall’s sell and trading options. If we missed any details or there’s more you’d like to know that we didn’t include in this article, consider leaving a comment and letting us know. We’d love to hear from you.