Dealerships are packing on the heat with multiple advertisements towards appealing to consumer's who are looking to buy or lease a vehicle with their hard earned tax refunds. It's no wonder; the IRS speculates that a majority of Americans receive about $3,000 back in their taxes each year. That lump sum is enough to get you into a comfy and stylish new car, but is it worth it? For some yes, for others, they're better off staying with the car they've already invested their money and time into. If you are in need of a new set of wheels, here's some mistakes you'll want to avoid:
Mistakes To Avoid
- Avoid walking into any dealership with no set budget.
- Likewise, make sure you do your homework on the dealership and the vehicle you're interested in before getting emotionally attached.
- Don't spend money you don't have...well you might have a huge lump sum to spend, it doesn't mean you should feel pressured in spending all of your hard-earned cash at one particular place.
There are few options consumers can choose from if they do decide to purchase a new vehicle. They are: 1. You can either use the money for a sizable down payment on a new or used car. The benefits of this option is: Usually securing an auto loan or lease for a new buyer with no or poor credit is a tricky situation because of lack of trust. Auto dealerships may not feel comfortable or secure in loaning a substantial amount of money with someone who has a poorly proven track record. Your tax refund may change their minds if you're willing to put down a decent amount. In other words, your tax return may open doors for you that were otherwise closed. 2. You can invest some of the money to fix or upgrade your current vehicle and possibly have some money left over. This may be a better option for the majority of consumers. It's not uncommon to exceed 100,000-mile marker. A vehicle with proper maintenance can easily surpass that expectation making this choice a thriftier option compared to taking on the burden of buying or leasing a new vehicle. A set of new tires, for instance, not only improves appearances but can also improve the ride quality, limit road noise, and even save you money at the gas pump. Some other inexpensive repairs or upgrades can improve appearances and also restore the pride of ownership in owning your vehicle. Don't let foggy headlights, or interior rips and cracks put a damper on your pride. Simple fixes are available that can either hide these damages or even repair them completely. For instance, foggy headlights can often be buffed out by a professional at an auto detail shop, and they may even be able to make your seats look new. All for less than the purchase price of a new vehicle. So if you've decided you want to pursue the new car route, make sure you go about it the right way. Your tax refund only adds an extra step to the car purchasing process, so pay close attention. Your employer is required to have your w-2 to you by February 2nd. Once you've received all of your w-2's (if you've had more than one employer during the year), make sure you file your taxes properly. Once you've endured the long waiting period that seems to take forever, and your taxes have been credited to you in your bank account, it's time to start. I mentioned the long waiting period previously, but I think this time is best utilized doing research on vehicles that may meet your needs, as well as what your exact needs are. Will you be purchasing a new vehicle? Or another used vehicle? You need to determine your needs before you waltz into just any auto dealership
. Remember, auto dealerships will be anticipating excited consumers like yourself and are only interested in getting you to sign on the dotted line. That said: Let your needs influence your car buying decisions, not your wants. It's easy to become overwhelmed once you step foot on an auto dealership lot, so using the time it takes to get your refund back is ideal for doing your research at home. That way you can't be caught off guard. Remember, the auto dealerships are anticipating you being blinded by the excitement of your tax refund so they won't make things easy for you. Sit down and think of the following, or even get out a notebook and take notes as do the research: What inspired you to want to get a new vehicle? are you looking for a new car because you've already up to your neck in maintenance fees? Or is it because everyone else around you is driving a new sporty car. While the first scenario warrants a closer look at the benefits of purchasing a new car, the last one, not so much. Now that you've assessed whether or not you need a new vehicle, it's time to determine your wants vs needs. For a huge investment like this, it's vital you look at your 'needs' first. For instance with your next vehicle you might make a list like the following:
- Better fuel economy 20-30
- High safety crash ratings
- AWD vs FWD
- etc., etc.
The above would be similar to your 'needs' list. Your 'wants' should not take priority of your 'needs' list, but if you can find a vehicle that matches your 'needs' list that includes some or all of the features from your 'wants' list, then congrats!
- Exterior color blue
- Interior color black
- Awesome speakers and sound system
- Six-disc CD player
- Etc., etc.
After you've set a budget and determined what your needs and wants are, you're ready to go to the dealership. But wait...while it may be tempting to take the cash in hand with you, avoid doing so. You'll send the wrong message to the dealership ("I'm irresponsible and I'll take anything you throw at me!"), leave it at home or the bank. Instead, ask any of the sales guys to be shown vehicles that meet your above expectations and do let them know you're not in a hurry to make a purchasing decision. This phase of the car buying process can take days or even weeks. It's totally dependent on the car buyer. Your goal for looking at cars that meet your expectations is to get behind the wheel of the vehicles that interest you and determine if you and the car will fit like a glove. Make sure you keep track of the vehicles that interest you. Once you've narrowed down your list of vehicles, it's time to go home and reflect on your research. You can take it a step further by requesting a test drive of the particular vehicle you're interested in. But be warned, many car dealers will attempt to get you to sign the purchase agreements afterward. Remain firm! After some time of reflection and going over your notes and your experiences with the cars, you should be able to walk into the dealership confident and to know exactly which vehicle you want. Now it's time to negotiate the price and walk away with the keys to your new vehicle!