Tax refund. Got one yet? Well even if you don’t, millions of people will, and this is great news for car dealers. The fortunate folks who can afford to pay off their Christmas largess with a few paltry Benjamins left over will often go car shopping. $700 down, $500 down. Heck anything more than a pulse will get you into a car these days. The effect of all this newfound money being dispersed into our economy: a lot of interesting and stupid behavior at the auctions. For starters, everything gets a lot more expensive.
I’ve seen vehicles begging for a buyer at $700 back in November go for over $2000 come mid-January. Now part of this obviously has to do with legitimate demand. But the better half of this comes from part-time dealers who like to go to the sales and either try to buy during the good season, or like to buy for folks that they know…. or think they know.
I see faces during this time of year that are fixtures for about three months out of the year, and then vanish to the great beyond. Unfortunately for many of them, their valuations are based on auctions in years past before the sub-prime era wiped out resale values.
The few good cars they buy will frequently find a willing buyer. But the several bad ones get stuck at the auctions for months on the end since these buyers don’t have the resources or know-how to fix the cars. As the mischevous sort that I am, I’ll save the trashy trade-in’s for the eternally optimistic buyers of tax season.
[For more info., contact steven.lang@duke.edu]
Isn’t it a bit early for tax season refunds? Even if you know you are going to get a refund, you will probably have to wait until the end of January before you get all your forms. Then you have to file. Then you still have to wait for your check in the mail.
As a humorous aside, my mortgage company sent me email saying that “for your convenience” they were not going to send me a paper statement. Instead I should wade through their website and print out the contents of a popup window (after editing their HTML by hand to make it fit the printed page). All I can say is that I hope my bank doesn’t try to do anything “for my convience.”
Steven,
Do auctions accept IOU’s? Since I’m in CA, I’ll likely get my paltry refund in the form of an IOU from a bankrupt state governemnt.
Waddya think?
Isn’t it a bit early for tax season refunds?
You are very correct, but tax-advance services are big business.
You’re looking at this wrong….
You can get a tax advance, but if you wait till April to buy, all the dealers may be out of business!
I have got to believe that there is a grain of truth in this. How many dealers do you think will take a tax return showing a refund as collateral?
There’s another name for tax refund. free loan to government of your money.
It’s not free money – it’s YOUR money. And the government has been holding it for more than a year.
If you are getting a large tax refund, you might want to adjust your deductions with your employer.
As I work for a Car dealer I can respond to the question by SunnyvaleCA about whether it is early for tax refunds…
We will start seeing the first of the refunds through electronic filing by the first week of February. Dealers are working to get their inventories of used cars up now before the tax refunds get going.
Dealers generally start January with a low used car inventory and this year even more so. From Thanksgiving through the end of December, the auto auctions hold fewer sales and less merchandise moves through the system. Right after the Holiday season, there tends to be an up tick in demand to fill flagging used inventories.
This year this is even more true as many dealers slowed down their purchase of used vehicles this fall because of slowing sales and difficulty in getting financing to buy vehicles.
We are now seeing a bit of an over correction in demand now. We have seen a swing in prices on the same merchandise go up several thousand dollars in some cases in just a couple of weeks.Believe it or not, at dealer auctions in the southwest regions, full size trucks and SUV’s are bringing top dollar right now…
Just great, more people with the memory of a gold fish will go buy more cars.
This is very true. Two years ago I wound up having to buy a beater in early March, the old beater was very ill (and not worth fixing). Talk about having to wade through a lot of over priced junk.
@SunnyvaleCA :
Not necessarily true. We received the last of our forms yesterday, I filed online today and we should have our refunds by a week from Monday.
Good thing we’re in a state that isn’t bankrupt yet…
I quite often end up owing the IRS a couple of hundred. Usually, the State of Nebraska owes me about the same amount that I owe the feds, so tax time is a wash.The reason for this is that I have
regular job and an independent contract job and have to pay the Feds both Self Employment tax and income tax on the independent job while owing the State just income tax.
I hate doing quarterlies, so I claim one less dependent than I actually have on my regular job.
This pays my entire income tax and all but $200 of SE tax.
When I tell people that I usually end up owing the Feds, they ask about penalties and interest not knowing that, in most cases, you can owe the Feds up to $1000 without penalty or interest charges so long as you have at least as much pay withheld this year as last year. RTF tax manual,people!