Publish Date - March 24, 2020
Author: Greg Thibodeau
7 Reasons Uncle Sam Approves of Using Your Tax Refund to Buy a Car
Can’t decide what to do with your tax refund check? Here are seven good reasons to put your tax refund toward a new car purchase. Learn more from myAutoloan.
Living in America means you have plenty of choices. From where you live to what you do, your life is in your hands. Around this time of year, living in America also means you get to choose what to do with your tax refund check—your reimbursement for any excess amount you paid to the federal government or a state government over the last year.
As The Washington Post reports, the average tax refund this year was about $3,100, which is enough to cover part or all of a down payment on a new car loan. You have plenty of options for what to do with your tax refund check, but here’s why you might want to consider buying a new car first. Good ol’ Uncle Sam would approve, and here’s why!
1. Freedom! Life, liberty, and the pursuit of happiness. That’s the American way! When you buy a new car, you are the boss! You get to pick the car, when you test drive it, the car’s color, the interior gadgets, and maybe even the license plate letters and numbers! A tax refund check can give you the financial leg up that you need to buy the new car that you want—not just any old car.
2. You can reduce your monthly payments, which means you have more money in your pocket to pay for clothes, food, and entertainment. You’re essentially injecting money into the economy and helping businesses grow! (Note that your monthly car loan payments are only lower if you put more money into your down payment and take out a smaller car loan.)
3. A new car can be more fuel-efficient. The fuel efficiency of the U.S. auto fleet hit a record in 2018, reports MarketWatch. Fuel efficiency in 2018 averaged 25.1 miles per gallon in real-world driving, adds the Environmental Protection Agency, and mpg is expected to have climbed to 25.5 mpg for 2019 model year vehicles.
Better gas mileage and lower emissions are good for air quality and the overall health of the planet. And Uncle Sam? He’s a big fan of both.
4. Interest rates are mostly in your favor. When the Fed cuts interest rates (as it’s doing now), borrowers can see more favorable interest rates for all sorts of financing, including auto loans, student loans, and home mortgages.
The average interest rate for a new vehicle loan stayed under 6% for the eighth month in a row, reports Edmunds.
Slashing interest rates is one way the government attempts to bolster the economy when the outlook seems uncertain. By making borrowing more attractive, the government also makes spending more attractive.
5. A new car is more reliable, which means you can spend less time and money on car repair issues, and more of doing what you love or taking care of business.
6. You’re happier (and healthier). That new car smell is a universal trigger for happiness. Feeling happy can help “combat stress, boost your immune system, protect your heart, and reduce pain,” reports Healthline. Plus, happiness may even increase your life expectancy.
In turn, the health benefits of happiness (combined with healthy eating) do have economic perks. As noted by researchers in Economic Costs and Benefits of Healthy Eating, a healthier population can lead to “lower medical care and institutional care costs, higher productivity, and improved quality of life.”
7. The roads are safer. There’s a chance your current beater has unaddressed safety recalls (one in five cars on the road today has an unresolved safety recall), a brake squeak here and there, and a gasket loose in at least one spot in the engine. Those quirks (both known and unknown), may give your current car its distinctive personality. Still, they can also mean that the vehicle is a potential safety hazard for you and other motorists. Driving a new car with the latest safety features and a valid warranty can mean everyone rides safer.
In the end, it’s your decision how you spend your tax refund. That’s the beauty of living in America! And if you’re ready to buy a new car, apply for financing through myAutoloan. We’ll show you up to four offers in minutes, so again, you can choose the best loan for you.