Greetings from the Hemet Car Guy,
If you’re like a lot of Americans, you’re planning to use your income tax refund as a down payment toward the purchase of a new or used vehicle. How exactly do you go about doing this? The process is actually pretty simple.
Your employer should have your W-2 statement to you no later than Feb. 2. This document officially reports how much you have earned during the year in taxable wages, as well as how much federal income tax was withheld from your earnings. You will use your W-2 statement when filing your taxes with the federal government in order to find out if you are owed a refund, and how much that refund will be.
Customers are already visiting the VIP Autos lot to get ideas on what vehicle to purchase in the future with their anticipated tax refund, even though they haven’t yet received their W2 from their employer.
Through the years I’ve had many people in the valley call me for auto-related advice.
When you are deciding if you should use your refund towards the purchase of a new car, you should treat the money as if you had saved it up in a bank account. If you are in the market for a car, you’ll have a lump sum of cash available to you, which can make a nice dent in your down payment. Depending on how much you spend, it could be the entire down payment or more.
However, there are some pitfalls. For example, some dealerships will advertise promotions that will double your tax refund. These offers sound great but, as with everything in life, if it sounds too good to be true, then it probably is. Even the more legitimate promotions will have restrictions, such as a limit on how much they will “double” for your credit. The limit is usually around $1,500. Most of the ads say to “see dealer for details,” so you know there will be other restrictions when you arrive.
Sometimes they will restrict the promotion to only certain specific vehicles and they may only have two or three of these on the lot. Sometimes the maximum amount they credit you will vary based on the particular model.
If you are looking at used vehicles, ask for a CarFax vehicle history report.”
The Hemet Car Guy
One thing I will guarantee you is that they are never actually going to really give you anything. The best they will do is just use your refund check amount to lower the price to the level that they would have negotiated anyway.
Let’s say you were buying a $30,000 car, and you bring them a $1,000 tax refund check. In the negotiation, they agree to lower the price to $28,000. Now they will give you a $1,000 credit towards your down payment. What they didn’t tell you is that they would have been willing to sell you the car for $27,000, so you didn’t really get anything extra.
Use your waiting time to research your vehicle purchase. After verifying the amount that you will be refunded, start looking into your car options. Are you going with used or new? Which vehicles on the market seem to suit your everyday needs best? Car dealers are anticipating shoppers looking to use their refund on a car loan, so make yourself an informed buyer instead of an easy mark.
If you know that you will be buying a new or used car in the near future, do your homework; narrow down what you want ahead of time, shop online with reputable dealers in your area, and if you visit a dealership, remember you don’t need to buy on your first visit. If you are looking at used vehicles, ask for a CarFax vehicle history report. VIP Autos gives every potential buyer a full report on every vehicle as well as a market value report so that you know right away if you are getting a good deal; this makes the process as easy as possible.
I think it’s best to work with dealers in your area because if you have a problem, it’s in the dealer’s best interest to make you happy so you will come back in the future. Many dealers work with bad credit and can get you the best financing possible, no matter what your credit looks like.
If you don’t want to deal with the hassle of credit reports, apply online through the dealer’s website. This way , you will know exactly how much you’re approved for before you even set foot inside the dealership.
You will be save time and potential frustration by only looking at the vehicles that you know you can afford.
Hope this helps
The Hemet Car Guy