According to a new survey and infographic released by CarMax, Inc. (NYSE: KMX), the nation’s largest retailer of used cars, one in four American adults say they plan to save (26 percent) or pay back debt (25 percent) with their tax refund this year. Among those expecting a refund, one in six (17 percent) are likely to use the money to shop for a car. The survey explores the tax filing habits of Americans and how they plan to spend their refund. Almost three in 10 people (29 percent) are not expecting a refund this year. Young Adults Most Likely to Spend Refund on Car The online survey, conducted by Ipsos Public Affairs on behalf of CarMax, reveals that among those who are expecting a refund, those under the age of 35 (29 percent), parents (26 percent) and residents of the South (22 percent) are particularly likely to put their tax refund toward the purchase of a car this year. When it comes to putting their reimbursement toward a large purchase like a home or car, parents are twice as likely (23 percent) to say they have done so than are adults without children in their household (11 percent). “Historically, tax refund season has been a very busy time for CarMax,” says Cliff Wood, executive vice president of stores at CarMax. “Buying a car any time of the year is a big decision, and we work to make the process fun and hassle-free so customers can focus on what matters most: finding the perfect car for them.” Midwest is Best at Filing Before Deadline Midwesterners are most likely to say that they file their tax return in advance of the deadline (89 percent), followed by people living in the West (83 percent) and the Northeast (81 percent). In the South, 14 percent say that they file on April 15 or ask for an extension. Though many have plans for how to use their refund, few spend it before they actually have it in hand. Less than one in 10 (7 percent) say they have ever spent their tax refund before receiving it, compared to eight in 10 (84 percent) who have not.
Men More Likely to Ask for ExtensionMen (7 percent) are slightly more likely than women (4 percent) to characterize their tax filing style as “needing an extension.” Unmarried adults are twice as likely (7 percent) to describe themselves as “needing an extension” compared to married adults (3 percent). Overall, 85 percent of American adults file taxes on time, submitting either in February (45 percent) or March (40 percent). Spending Habits Remain the Same Year Over Year Plans for spending this year’s tax refund are similar to how respondents say they have used their refund in the past. Roughly four in 10 have paid debt (44 percent), saved it (40 percent) or used it on everyday expenses, such as groceries, bills or gas (38 percent). One in five say they have used it for travel (23 percent) or home improvements (21 percent), while one in seven (14 percent) have spent their tax refund on something larger, such as a car or a house. CarMax has more than 20 years of experience in helping consumers make an informed car buying decision. Wood has provided five key tips on how to best shop for a car during tax season:
- Do your research: Start your search online by exploring pictures, reviews and financing terms before you test drive. On carmax.com, you can search more than 35,000 vehicles nationwide based on your preferences.
- Buy for quality: The biggest mistake people make when purchasing a car is they buy for price – not for quality. Make sure the vehicle has gone through a rigorous quality inspection.
- Narrow your options: Select a few vehicles you want to test drive in advance and visit a store where you can try out a variety of makes and models all at one place.
- Go somewhere you trust: Choose a retailer you trust to provide a transparent and enjoyable car buying experience focused on your needs. For example, sales consultants at CarMax are paid a fixed commission (except in CA) no matter what car they sell, so they can focus solely on helping you find the right car for you.
- Ask questions: Ask your sales consultant as many questions as you need so that you fully understand the terms of your agreement before you sign any documents.