Got Your Tax Refund in South Florida? Here's How Gen Z Is Using It to Get a Car (Without Getting Burned)

4 MIN. READ

 

Key takeaways:

 

• Your tax refund can make a strong down payment, lowering your monthly car payments and interest costs.
• South Florida’s cooling used car market means now is a smart time for buyers to shop.
• Taking time to compare lenders can help you avoid high financing fees and get a better deal.

Congratulations! You just got a tax refund. If you are in the market for a car, this might be the perfect opportunity to get a great deal.

After a few years of rising prices, the used car market is finally starting to cool off a little. That means your tax refund could make the ideal down payment to help you score a nice price and payment plan on your ideal vehicle.
 

Why a Down Payment Can Get You a Better Deal

While lenders can finance 100% of the value of a car, they usually prefer that you put some money down. It’s especially true if you’re buying your first car and have a limited credit history.

Putting money down reduces the risk the lender is taking. This may result in a better interest rate for you, and because you’re financing less, it will be easier to get car payments that fit within your budget.

Let’s look at a quick example: If you’re financing a $26,000 car at 7.2% over 60 months, financing the entire amount means you’ll pay $517 a month. If you can come up with a $4,000 down payment, this exact same interest rate and loan term will translate into a $437 monthly payment.

Building up enough for a down payment can take time, but your tax refund gives you a head start.
 

Using Your Tax Refund to Cover Upfront Costs

Turning your tax refund into a down payment is a good way to save on car financing, but you can also use this money to cover other costs:
 

• You’ll have to register your new car at your local Driver's License and Motor Vehicle Service Center. The base fee is $225, but this can vary by county.
• When you buy a car, you must pay a 6% Florida sales tax on it.
• You’ll also need to get car insurance. Some providers offer a discount if you pay for a full year upfront, making it easier to manage your monthly budget.

If you have money leftover after covering these upfront costs, you can also use your tax refund to start an emergency fund for car repairs. Used vehicles require maintenance and small repairs over time, and it’s always a good idea to set some money aside to avoid surprise bills.

Take the Time to Shop Around

When you get your tax refund, don’t rush to go buy a car.
 

• If you go straight to the dealership, you’ll likely get financing there.
• It’s rarely a good idea. Dealerships can tack on additional fees to the loan you’re getting, and they can bundle add-ons into the amount you’re financing.

Your best option is to take the time to shop around. Even if you have to spend a part of your tax refund to pay for a rideshare or give gas money to a friend, it’s worth it not to rush into buying a car.

Take the time to compare different lenders. You’ll typically get a lower interest rate with credit unions, especially if you have a limited credit history. Regardless of the lender you choose, you should compare interest rates, monthly payments, and the total cost of financing.

Once you find a lender who offers a good deal, get a pre-approval. That way, you’ll know exactly how much you can afford to finance, and you can start shopping for a car.
 

How PFCU Helps You Get a Good Deal on a Car

Power Financial Credit Union can help you finance a new or used car, even if you’ve never bought a car before.
 

• We offer flexible auto loans with competitive rates. You can finance up to 100% of the vehicle’s value or turn your tax refund into a down payment to finance less.
• If you’re a first-time car buyer, we have a great program that doesn’t require any credit history. Instead, we’ll look at other factors, and you won’t get penalized for your limited credit history.
• We’re also partnering with Auto Advisors to help you find the right car without having to go to a dealership. This stress-free way to shop for your next car is free for our members.

Want more information about South Florida car loans or becoming a Power Financial Credit Union member? Contact us online with your questions or visit the closest branch.

FAQs

How do I know if I’m getting a good auto loan rate?

Start by getting pre-approved through a credit union before visiting a dealership. This lets you compare interest rates and loan terms, so you don’t overpay on dealer financing.

Can I finance a car if I don’t have much credit history yet?

Some credit unions like Power Financial Credit Union offer first-time car buyer programs that consider factors beyond credit score. This can help you get approved for financing and start building credit responsibly.

Do I need a down payment to buy a car?

No, many lenders can finance 100% of the car’s value. However, putting money down is recommended, especially if it’s your first car or you have limited credit history. A down payment reduces how much you have to borrow, which may help you get a better interest rate.