American taxpayers have tax refunds at their disposal. The average tax refund is roughly equal to the average down payment on a new vehicle (about $3,000). So does it make sense to use that refund for a new car purchase? Edmunds.com recommends that prospective buyers exercise due diligence before running to the car dealership.
“Dealers are well aware that buyers may suddenly have an influx of cash on hand this time of year, so it’s not uncommon to see promotions and offers tied to tax season,” says Carroll Lachnit, Consumer Advice Editor at Edmunds.com. “And while there are good deals to be had on new cars, we strongly encourage consumers to take advantage of every research tool at their disposal before they plunk down their refunds as down payments.”
Before investing tax refunds in a new vehicle, Edmunds.com advises consumers to first check out the following tools and resources:
Guide for First-Time Car Buyers – Edmunds.com’s one-stop shop to guide you through the new car buying process. From finding your car to closing the deal, Edmunds.com has you covered. And despite the title, this guide has some tips that can benefit everyone -- even veteran car buyers.
Monthly Loan Payment Calculator – Easily calculate your target monthly payment by inputting the new car price, value of trade-in, financing terms and expected down payment.
Gas Guzzler Trade-In Calculator – With gas prices as high as they are, it might be tempting to trade in your gas guzzler for a fuel-efficient alternative. This calculator will help you understand how much – or how little – money you’ll actually save.
Low APR vs. Cash Back Calculator – Dealers will entice you with low APR rates or cash incentives. Use this tool to find out which offer makes more sense for you and your wallet.
True Cost to Own® - The cost of a new car goes well beyond the negotiated price. Find out how much your new car will cost over the next five years when you consider all the fuel, insurance and maintenance costs.
For even more resources to help you get the most out of buying your next vehicle, please visit Edmunds.com’s new car and used car pages.