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Use Your 2019 Income Tax Refund to Buy a Used Car

Use Your 2019 Income Tax Refund to Buy a Used Car

 

One of the best times of the year to visit a car auction is early in the year when you are expecting an income tax refund. While you could use that towards a down-payment on a car, you can get a much better value with your money by buying at an auto auction.  You would also save on interest over the amount of time you would have financed a car over the length of the car loan.

 

 

The average income tax refund is around $3,000 – this could buy a decent running used car or truck at an auction. Or even better, add some more money to that to increase the quality of the car you can buy.  This method of buying a car does require some diligence and a little research. It is important not to just bid on any car you like the looks of – buying a car at an auction requires one to be cautious and careful about what they are buying and how much they should be willing to pay. It is perfectly fine if a car is in need of some repairs as long as you are aware of them and factor that into the price when bidding. On the other hand, if you prefer a used car to be ready to go without any work or hassle, it may be better to buy at a used car lot instead. However, one can expect to pay much more for the same car from a used car dealer.

 

What You Need to Know

 

Some auctions will allow you to only bring your W-2 prior to filing for your tax return. This way you do not have to wait for the IRS to issue the refund to you. This method will likely include a small fee and is not offered by all auto auctions. As always, it is best to contact the auction beforehand to familiarize yourself with their specific policies and offerings. Another option you may want to consider is also selling your current vehicle at auction. Used cars are in high demand this time of year so it is a good time to get the most value from your second hand vehicle.

Expect to spend at least $2,000 to get a decent car worth buying. Be sure to include some room in your budget for taxes and auction buyer fees. These vary by location so contact the auction and ask what fees they charge.

If you’re not sure about buying a car at an auction – don’t worry because public auctions will cater to new bidders and make the process easier. Be sure to read our Auction Buyer’s Guide for more tips and information. Most locations will allow you do buy a car without having to bid during the auction if you prefer. This might not result in the best deal but can be less intimidating for some buyers. You can also read this guide on buying a used car or truck.

 

Helpful Links

efile.com Calculator – Estimate Your 2019 Tax Refund 

Five Mistakes to Avoid at a Public Auto Auction

IRS.gov – Check Your Tax Refund Status Online
 

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