The average tax refund last year was nearly $3,000. That’s a lot of cheddar—just about the amount of a down payment to buy or lease a decked-out Honda CR-V or new Honda Pilot, in fact. Like peanut butter and jelly, tax refunds and new cars are made for each other. They’re the industry’s version of Simon and Garfunkel, of Han and Chewy. They’re Ross and Rachel, Bert and Ernie, Scooby and Shaggy. (Need we continue?)
In other words, spending your tax return on a new vehicle just makes perfect sense. Check out these 5 tips to wisely use your tax rebate at a dealership near you this year.
Always Get Pre-Approved for Financing
Before you even get Uncle Sam’s check in the mail, you should apply for a car loan. Understanding the terms, payment amounts, APR, length, and other restrictions of your auto loan will put you in a better position to make an educated, well-informed decision. You can apply for auto financing online at any of our Honda dealerships in Arizona, or simply contact a dealer near you to get the process started.
Pay Down More for a Lower Lease Payment
Thinking about using your tax refund to lease a new Honda Passport, Accord or Pilot? Smart move. To become an even wiser car shopper, go above and beyond the asking “total due at signing” price given by your Honda dealer. This tactic, which some refer to as “making a large drive-off payment,” will reduce the monthly lease amount for the entirety of your leasing term, which is typically 36 months.
For instance, if you pay down $4,000 to lease a vehicle whose total due at signing is $2,999, your monthly payments can be slashed by 10% or more. Of course, auto dealers’ pricing is not set in stone, so it’s best to discuss payment and term options with a salesperson at a dealership near you.
New Models, Big Savings
Like the clearance rack at the grocery store, any time a new model is released, prices on the previous year’s model drop at your local dealership. Spring happens to be a common season for model changeovers to conclude—September is typically when most new models are released—and that obviously coincides with tax season. This means you can find great tax refund deals on new cars, SUVs, trucks and vans at the dealership.
It’s best to check your dealership’s inventory after getting your tax rebate; identify which vehicles are last year’s leftovers, count how many are in stock, and request a quote. Dealers will gladly help you save more on those one-year-old models, especially if you have a vehicle trade-in tagging along.
Don’t Buy More Than You Can Afford
Your tax refund isn’t a prize for completing the 365-day marathon called life; it’s money you’re owed, and it should be valued as such. If you can’t afford to swing monthly payments on the highest trim, choose a model that more accurately fits into your month-to-month budget.
A good car dealer won’t pressure you into buying a vehicle you can’t afford; if you default on a loan or don’t pay for a lease, they’re at risk of losing money. Therefore, utilize their experience and knowledge to get an idea of what type of vehicle you should buy with your tax return and refund. If you need advice in Phoenix, we invite you to visit any of our Valley Honda Dealers.
Start the Year Fresh & Rebuild Your Credit
Those with poor or no credit can rehabilitate their scores fairly quickly by financing a pre-owned vehicle. After paying off any outstanding debts with your federal tax refund, apply for a used car loan at a nearby dealership. Even auto financing with a higher interest rate is okay; you’ll have the opportunity to refinance the vehicle loan months down the line should you make enough on-time payments and increase your credit score.
In these scenarios, it’s recommended that you put down a substantial down payment to keep the loan’s principal balance and monthly interest payments as low as possible. Consider a certified pre-owned Honda, too, if you have a vehicle to trade in along with your tax refund as payment.
Ask Your Dealer About Tax Season Specials on Vehicles
Tax season means extra tax refund offers on new and used vehicles at the dealership. Some of these special sales may be advertised, and some may not; the only way to identify special tax season pricing in your area is to speak with your dealer—they won’t bite.
“Buy a car with your tax refund,” they said. “It’ll be fun,” they said. It seems like ‘they’ were right. To put your tax return to good use in the Phoenix area, head to one of our Arizona Honda dealerships. We have great spring Honda specials on many new vehicles and outgoing Honda models, including the CR-V. Contact any of our Honda stores near Phoenix for details, and good luck sticking it to the man this tax season.