Many American taxpayers are more likely to use their tax refunds to get a new car, recent surveys found.
Financial information provider GoBankingRates.com looked at statistics from eBay Motors and analyzed information from over 6,000 financial institutions and found that about a quarter of Americans would use their tax refunds to buy a new car.
An online poll by used-car retailer giant CarMax with over 1,000 participants revealed that 17 percent of taxpayers would do the same thing with their refunds. Younger taxpayers or those below 35 years old (29 percent) and parents (26 percent) are more likely to use the money for a new car too.
The IRS has announced that the average refund is expected to increase by more than 3 percent to $3,034 this year.
GoBankingRates Managing Editor Casey Bond said that one reason many car buyers take their refunds to a dealership is the auto loan rates these days are acceptable. GoBankingRates’ data show that the best auto financing rates for a three-year loan and a four-year new-car loan can be found in Detroit (2.67%) and Hawaii (1.9%), respectively.
Bond also said in a written statement that the average refund is equivalent to a 20% down payment for a $15,000 auto loan.
But in CarMax’s results, it seems that many Americans are more interested in paying off debt and beefing up their savings than getting a new ride. Twenty-five percent of taxpayers said they would rather spend their refunds to pay off debt and 26 percent said they will just save it.