Lending Club Blog

You Probably Wouldn’t Buy a Car from an Accountant

It is certainly wise to work with particular people and businesses based on their respective strengths and skill sets. Yet even though you probably wouldn’t buy a car from an accountant, you might be tempted to have a car dealer do your taxes.

My recent overview and data posts described the practice of refund anticipation loans in detail, but they did not mention a side-industry that has sprung up as well: businesses that offer to prepare your taxes as long as you use your anticipated tax refund to make a purchase from them. This practice is most frequently used by car dealerships, but I’ve also seen furniture stores trying to employ it as well.

Car dealer-prepared tax returns have some of the same problems as refund anticipation loans. In fact, they actually are refund anticipation loans at their core, with the proceeds going towards your down payment. If your return is prepared inaccurately, or if you receive a smaller return than expected or no return at all, you are still responsible for the amount that the car dealer credited you with. So if the dealer uses your anticipated refund to reduce the cost of a car by $3,000, for example, you’ll be responsible for paying the difference if your refund comes up short. Another problem is that it’s difficult to judge the cost of these loans. Even if they do provide this service “for free,” can you really be sure that the actual costs of the service aren’t hidden in the price that you’re paying for the car?

Clearly you’d be much better off waiting to receive your actual refund and then using it as payment towards a car. Unlike traditional refund anticipation loans, which can be used for pressing financial needs (though given the high costs, we wouldn’t recommend it), in many cases you can wait to purchase a car until your receive your actual return. Using the methods described in the aforementioned refund anticipated loan posts, you probably won’t even have to wait very long.

Realize that a car dealership offering to file your tax return is just another way to get you, a potential customer, in the door. Using some common sense in such situations will help you to quickly realize where these businesses’ true interests lie. If you’d like to purchase a car without the high cost of financing through the dealership, whether through their traditional financing or tax return “discount,” or if you need help coming up with a down payment in order to leverage the dealer’s financing offer, consider a low-interest person-to-person loan from Lending Club as a more affordable alternative.

Monday, February 25th, 2008 at 5:09 am

Comments (0)

Recommended

Types of Loans 101

Growing Your Business By Using Capital

9 Reasons to Open an IRA

6 Reasons to Get a Personal Loan

See more
Lending Club Awards
  • Archives z

Recent Posts

Line of Credit vs. Loan

Lines of credit (LOCs) and small business term loans… Read More »
September 28, 2016

Types of Loans 101

There are many types of loans out there and… Read More »
September 16, 2016

Meet Patrick Dunne — Lending Club’s Chief Capital Officer

Patrick Dunne, Chief Capital Officer,… Read More »
September 8, 2016

Growing Your Business By Using Capital

Smart small business owners don’t wait to consider borrowing… Read More »
August 19, 2016

9 Reasons to Open an IRA

Retirement: a word that often comes with many connotations.… Read More »
August 5, 2016

6 Reasons to Get a Personal Loan

While it would be great if we all had enough… Read More »
July 29, 2016

Lending Club and the Marketplace Model

Some of our investors have observed the funding environment… Read More »
July 28, 2016

A Recap: Credit Strength on the Lending Club Platform

We are proud of our… Read More »
July 14, 2016

A Message to Investors from our President and Acting CEO

Today, our President and acting… Read More »
May 19, 2016

Lending Club Receives Tribeca Disruptive Innovation Award

Disruptive innovation comes in many… Read More »
April 29, 2016

2014

We went public today!

Ringing the bell this morning at the New York… Read More »
December 11, 2014

New and Improved Statistics Page

We recently redesigned our Loan Statistics page to make… Read More »
November 13, 2014

Lending Club Honored with Economist Innovation Award

This month I was honored… Read More »
October 15, 2014

Welcome Vermont Investors!

Today, we’re thrilled to welcome residents of the state… Read More »
September 4, 2014

We filed to go public today

We filed a registration statement with the SEC today… Read More »
August 27, 2014

Our Billion Dollar Quarter

We’re excited to announce  that we’ve facilitated over $5… Read More »
July 8, 2014

Is Lending Club Available in My State?

Is Lending Club available in my state? That is… Read More »
July 7, 2014

Lending Club Joins Senator Cory Booker to Discuss Improving Access to Capital for Small Businesses

Read More »
June 20, 2014

Lending Club Named a CNBC Top 50 Disruptor for a Second Year

For the second year in… Read More »
June 17, 2014

PRIME is now Automated Investing

Lending Club is excited to announce that PRIME has… Read More »
May 14, 2014
View All w