How much the average tax refund is -- and what you should spend it on

Smart Uses for Your Tax Refund
Smart Uses for Your Tax Refund

A 2016 survey by GOBankingRates.com found that only 5 percent of Americans plan to spend their tax refund on a major purchase, such as a home or a car. Meanwhile, more than half of the respondents said they plan to be financially responsible with their tax refunds and use them to pay off debt or to increase savings.

Saving your tax refund instead of spending it is a noble way to use your refund — but that doesn't mean you should automatically cross off buying a car. In some cases, it makes sense to use your tax refund to buy a new car.

Why You Should Use Your Tax Refund to Buy a New Car

Purchasing a new car can be expensive. According to Kelley Blue Book, the average new car transaction price (as of December 2015) is $34,428. And, another GOBankingRates study that examined car costs in the U.S. found that on top of auto payments, U.S. car owners should expect to pay an additional $11,227 on average to own and maintain a car for three years.

When it comes to covering these costs, every little bit helps — and that's where you tax refund comes in. While the IRS is still processing tax returns, the average tax refund as of April 1, 2016, is $2,989. That's nearly enough for a 20 percent down payment on a $15,000 car loan.

Don't miss this year's most important tax dates to know:

Currently, now is a good time to use your tax refund to buy a new car rather than later in the year because the Federal Reserve will likely raise interest rates this year. Yes, the Fed already started raising interest rates in late 2015, but according to Interest.com, the average cost of a new car loan "is only up about a quarter of a percentage point over March 2015." So currently, rates aren't having too much of an impact on car loans.

But eventually, auto lenders will need to increase the cost of borrowing to match the national rising rate trend. And as any car owner knows, the higher your auto loan rate, the more interest you pay on your car loan.

For anyone considering a new vehicle purchase, this tax season might be your last chance to get in on an auto loan at an affordable rate.

Average Auto Loan Rates in the United States

According to Informa Research Services, the national average rate on a new car loan with a five-year term is 3.58%* — which is nearly as high as a 30-year fixed jumbo mortgage loan:

Loan Products

National Average Interest Rate

New Auto Loan – 5 Years

3.58%

Used Auto Loan – 2 Years Old – 4 Years

3.80%

30-Year Fixed Jumbo Mortgage

3.59%

30-Year Fixed Conforming Mortgage

3.64%

5/1 Year ARM Conforming Mortgage

3.29%

Before interest rates on car loans get any higher, use your tax refund to get the new car you've always wanted.

SEE MORE: 13 Worst Things to Do With Your Tax Refund

*Rates are current as of 4/12/2016.

Casey Bond contributed to the reporting for this article.

This article originally appeared on GOBankingRates.com: Average Tax Refund Is Nearly $3,000 — And You Should Spend It on a New Car

More from GOBankingRates.com:
20 Things You Can Learn From Your Parents' Retirement
9 Secret Ways to Save Money at Kroger
15 Rich Influencers Who Didn't Need a College Degree

Your resource on tax filing
Tax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.
3 Great Tips for Your 2022 Taxes
There's no reason to wait until tax time to start making sure you've checked all the right boxes. Here are three tips for making the most of your money when it comes to filing your taxes in 2022.
Read MoreBrought to you byTurboTax.com
4 Types of Tax Preparers
There are four general types of tax preparers: certified public accountants, enrolled agents, tax attorneys, and non-credentialed preparers. Here's a quick guide on the differences between them.
Read MoreBrought to you byTurboTax.com
Child Tax Credit
Tax reform has caused some changes to the rules for the Child Tax Credit in recent years. Here's how to know whether you qualify for this credit.
Read MoreBrought to you byTurboTax.com
Maximizing Tax Deductions for the Business Use of Your Car
The business use of your car can be one of the largest tax deduction you can take to reduce your business income. This is a big, big deal. Why two bigs? Because your business income is used to calculate two taxes: your personal income tax and your self-employment tax (the amount you pay into Social Security and Medicare as the owner of your rideshare business). Maximizing your deduction for the business use of your car will help you minimize these taxes.
Read MoreBrought to you byTurboTax.com