Can you deduct your car on your taxes?

As a car company, we often get customers asking us, “Can you deduct your car on your taxes?They’re not alone: Americans everywhere are starting to think through their finances as tax season approaches. But most people don’t know all the ways that their cars can have an impact on their returns, or vice versa. We’ve rounded up some of the best tips you need to know to maximize your money. 

Your taxes and your [next] car

Perhaps the most obvious way to get the most out of tax season is if you receive a refund from the government after filing your return. The average American receives about $2,900 back on their annual tax refund. Compare that to the average used car price of about $20,000, and an average 12 percent down payment of $2,400. So it’s easy to see how that extra cash windfall can literally pay for a new set of wheels. It’s no wonder why TurboTax lists replacing your car as one of the best ways to spend your tax refund. Some people also use that cash to pay for service or upgrades to their current vehicle. 

One of the hidden benefits to putting a tax return towards a car’s down payment is that you can generally either afford a more expensive car (a higher-value asset). Alternatively, you can apply more money towards the down payment, which can lower your overall loan amount and APR. Keep in mind that high-quality used cars tend to retain their value better than brand new cars, so your money will go farther if you choose to buy used. 

Moreover, if you purchased or used a car for professional purposes (for example, a van for your catering business), you can also write that off on your taxes. Here’s a full rundown of the tax considerations for business vehicles.

Other Ways to Use Your Car on Your Taxes

Even if you don’t have a refund coming your way, you can still take advantage of some vehicle-related benefits come tax season.  You can deduct sales tax on a car purchase for local and state taxes when you itemize your deductions. (Given the large price tag of a new car, that’s a lot of sales tax).

On the flip side, if you live in certain states, you can also get a huge sales tax benefit by trading in a car. Those states will let you apply your trade-in credit to the total price before tax is applied, meaning it will bring down the overall taxable amount. So you’ll end up paying much less in sales tax upfront. 

Pro tip: Run the numbers first to see what your payments and APR might be when accounting for that extra cash. Better yet, get prequalified to get an accurate estimate of your monthly payments upfront. (Shift’s prequalification tool even lets you shop based on your predicted loan terms.) That’s some savvy financial planning.

Best Road Trip Cars

From summer trips to the beach to winter drives to the mountains, you’ll want a solid car that can handle the long distance in comfort and style. We’ve scoped out the best road trip cars that make the cut in terms of price, style, comfort, and reliability. Happy exploring!

Best for: STYLE

If you don’t have to worry about lots of space for extra riders or gear in a road trip car, and coolness is a premium, these picks are classics to consider.

2012 Ford Mustang GT Premium

2014 Audi A4 Premium

2014 BMW 4 Series 435i

2015 Ford Mustang V6

Used Car Buying Checklist

Best for: TERRAIN

Looking for road trip cars that can handle any kind of weather and road? These are some of your best bets.

2016 Jeep Wrangler Unlimited Rubicon


 

 

 

 

 

2016 Subaru Outback

2015 Dodge Ram 2500 Laramie

Best Road Trips in California

Best for: ROOM

If you’re traveling as a family (or friends), you’ll want to look for something that has the legroom and storage space to accommodate your gear and luggage. These roomy options check both boxes.

2018 Ford Expedition Limited

 

 

 

 

 

2012 Honda Odyssey EX-L

 

2015 Toyota Sienne LE

2014 Jeep Grand Cherokee Overland

 

 

2017 Audi Q7 Prestige

Best for: Fuel Efficiency

Especially if you’re planning to put in serious miles, it’s worth looking into a hybrid. Unlike most electric cars, you won’t have to worry about the battery running out, but still get the benefits of fuel economy. That can really add up on long drives.

2017 Toyota Rav4 XLE Hybrid

 

 

 

 

 

 

 

 

2016 Chevy Malibu Hybrid
Ready to test drive (or buy) one of these sweet rides? We’ve got you covered. 

Tips to Sell Your Car

Preparing your car for sale properly is key to getting it sold quickly at a good price. Whether a buyer is looking at a picture of your car online or in person, you will only have a few moments to convince them to take a closer look. So whether you choose to sell to a “private party” through a listing on craigslist, opt to trade-in to a traditional dealer, or use a full car selling service like Shift, it’s important to make sure your car looks clean and well taken care of. Here are some tips to sell your car and (hopefully) increase it’s curb appeal:

1) Clean up your car

This car selling tip may seem simple, but you’d be surprised how many cars are put up for sale without proper cleaning. Here’s what a cleaning should entail:

  • Wash & vacuum; wax is optional.
  • Clear out all of your belongings. Your entire car and trunk should be empty.
  • Wipe down your wheels, hubcaps and dashboard with car cleaning products so it looks new.
  • Clean mirrors and windows inside and out.
  • Wipe down leather seats with a leather cleaner.
Clean Car Trunk - Lexus IS
Source: shift.com

2) Consider minor upgrades

Small upgrades may be easily worth the money. You’ll be surprised how many things can be upgraded for $20-$70 that may mean you can sell the car for hundreds more. This might mean new seat covers, floor mats, headlights, or steering wheel covers — anything that will make your car look newer and more attractive. Small investments can pay off big time.

Car Inspection Repair
Shift mechanics doing a car inspection

3) Get your car checked by an ASE certified mechanic

C You’ll want to say with confidence and with a report that your car is running smoothly without any problems. This could make a huge difference for a buyer on the fence or a buyer trying to make a quick decision. It will also give you peace of mind to know this buyer isn’t going to come back a week later, fuming because something broke down or a warning light came on. You may also want to get a vehicle history report to show the buyer that the title is clean and the odometer reading is accurate.

4) Minor car repairs may be worth it

Aside from critical repairs that affect the car’s performance and mechanics, some minor repairs may be worth it when trying to maximize the sell price of your car.

Consider getting quotes to fix large, visible dents or scratches which can significantly lower the value of your car in the minds of buyers, particularly  in very noticeable areas such as the door or hood. People are more likely to be okay with scratches and dents on less-obvious areas like the bumper.

Consider other highly visible items to repair. Is your headlight broken? Is there rust from scratches that makes the car look old and worn? These kind of visible fixes can make a big difference in how a buyer evaluates your car. Generally, non-visible repairs like new brakes or tires won’t make too much of a difference in the offer price.

5) Unique Upgrades & Modifications

Keep in mind that a sleek, expensive modification to your car may seem awesome to you, but may not be what a buyer is looking for. In many cases, you will not retain the value of expensive 3rd party modifications. You may even want to consider having the mods removed if you want a larger pool of interested buyers (sometimes you can sell the parts separately, too).

This is particularly important when trying to do a trade-in at a car dealer or getting it appraised by an online service like Shift. As dealers both buy and sells cars, it needs to consider the needs of the buyer and has to be able to vouch for the modification. Thus it is not uncommon for dealers to devalue modification or outright reject cars with too many serious modifications. You may feel like your modifications are great and installed well, but keep in mind that a dealer can’t guarantee its quality and performance so they may adjust your quote.

6) Vehicle Age & Mileage

You may not be able to take back or change the age or mileage of your car, but you can be sure to sell it at the right time. Do not underestimate the psychological power of numbers. The value of your car can depreciate significantly when it hits specific milestones such as 100,000 miles or 10 years of age. If your car is nearing certain milestones, consider reducing your use of the car and selling it sooner than later.

7) Paperwork is important

Having poor paperwork can really hurt car’s sale price as well as increase the hassle of the transaction. It’s important to gather and have all your maintenance records, your title, and lien release papers ready at the point of sale. Be sure to review your documents early and correct any issues before engaging a buyer. This way you don’t lose out on a sale or be negotiated down due to the extra hassle and wait.

If all of this seems like a lot of work or you find yourself too busy to go through the process, consider an all-in service such as Shiftthey’ll pick up your car and handle everything (inspections, repairs, paperwork, car wash and sale). Good luck selling your car!

Car Buying for Women and Minorities: Survey

Today we’re releasing data collected from our National Shift Survey on consumers’ experiences with car buying and selling, as well as their opinions on everything from ridesharing to seat warmers.

Drumroll, please….

The Industry Needs a #METOO Movement
Nearly 90 percent of women have felt spoken down to, belittled, or disrespected during the car buying/repair process. Sadly, we shouldn’t be surprised. Data shows car buying is ripe with discrimination and abuse, especially for women and people of color. The status quo is unacceptable – the industry can – and must – do better.

Car Ownership is Here to Stay
We’ve been saying this one for years. The conventional wisdom is wrong about the future of car ownership. According to our data, more than 87 percent of people have no intention of getting rid of their cars for ridesharing. Which makes sense. Have you ever tried strapping a car seat in an Uber? Continue reading “Car Buying for Women and Minorities: Survey”

7 Handy Car Hacks That Will Make Your Life Easier

We all love our cars, but oftentimes we come across unavoidable problems and issues on the road that need a quick fix.  Below, we collected a slew of handy car hacks to make driving a breeze and tide you over until your next maintenance appointment. Read on, and share these tried-and-tested tips from Shift with your friends!

Continue reading “7 Handy Car Hacks That Will Make Your Life Easier”

Romantic Getaways in California

From national parks to wineries to beaches, the Golden State is home to endless options for outdoor adventures that are easily accessible by car. We collected some of our favorite picks for the most swoon-worthy romantic getaways in California to add to your West Coast long weekend agenda. Cue the wanderlust!

BIG SUR

While this one is perfect for a romantic getaway with your significant other, we also love this spot for a fun solo expedition and camping with the crew. “Get back to nature and escape to the wild and rugged coastline of Big Sur, which offers stunning views of the Pacific along miles and miles of dramatic cliffs. Visit a few ‘jewels’ of California’s state park system and walk among the redwoods to discover secret beaches and waterfalls. Soak in natural hot springs, pamper yourselves with a massage or spa treatment and enjoy a romantic dinner for two perched above the endless blue ocean.” (CBS Los Angeles)

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NAPA VALLEY

Perhaps the quintessential romantic getaway in California, Napa is a no-brainer. “It’s an interesting experience; peaceful and quiet floating through the sky intermittently interrupted by the roar and flames, only to have the propane turned off abruptly and be wrapped by the cool air and silent drifting once again. […]Hot air balloon rides are on many travelers’ bucket lists of vacation activities. I can’t think of a better way to check that item off your list than to enjoy the sun rising over Napa Valley. ” (The Vacation Gals)

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Check out our favorite road trip-friendly cars

JOSHUA TREE

“There’s no sunset quite as spectacular as a desert sunset. From the red-hued rocks to the yucca trees and tumbleweeds, Joshua Tree is a serene escape with sparse beauty all around. Rent a design-forward home in the middle of it all, and soak in the sights and sounds of the high desert. Explore the wilderness during the day and cozy up and star gaze with your S.O. at night.” (Refinery29)

LA JOLLA

“The village area of downtown La Jolla oozes luxury and has many romantic restaurants, bars, and cafes ideal for couples looking for a romantic getaway, but La Jolla’s main romance factor can be found at the La Jolla Cove. Curving around the Pacific Ocean, the La Jolla Cove is one of the most spectacularly stunning stretches of coastline in California. With a wide grassy area ideal for a picnic and a meandering walking trail along the perimeter of the cove, its an ideal place to spend a leisurely romantic afternoon.” (One Day In A City)

A post shared by La Jolla, CA (@lajolla.ca) on

SANTA BARBARA

If you’re making the trek between Northern and Southern California, this is a can’t-miss spot. “The air feels fresher and the ocean more serene in Santa Barbara, which offers great hiking and mountain views amid historic 1930s architecture and terra-cotta paved streets.” (LA Weekly)

Shop cars in your area

YOSEMITE NATIONAL PARK

One of our all-time favorites, “Yosemite National Park is sort of like a theme park plunked into the great outdoors: visitors can choose any number of activities during their trip, including hiking, climbing, trail rides, photography tours, live theater, and fine food.” (CN Traveler)

BONUS: Last but not least, one of the easiest romantic getaways in California requires almost no planning: a simple cruise along the iconic Pacific Coast Highway, spanning San Diego to San Francisco. The sweeping views are unforgettable.

#IHeartShift: 5 Things People Love About Shift

When it comes to finding your perfect car, we at Shift love playing Cupid! During Valentine’s Day, we featured some of our very own happy customers who met their dream cars on our Facebook, Instagram, and Twitter. In case you missed it, we rounded them all up for you here in one post.

Curious about what it’s like to buy or sell a car with us? Just read on and get the scoop straight from the folks who went through the easy-peasy experience!

Continue reading “#IHeartShift: 5 Things People Love About Shift”

We Expanded our Coverage Area

We know that selling a car is a big decision, which is why we emphasize a great seller experience. At Shift, there are no shady deals and no negotiation hassle. We take care of the legwork and get you a better price, which frees you up to live your best life. We’re excited to announce that we are bringing our delightful seller experience to even more areas in Northern and Southern California.

Continue reading “We Expanded our Coverage Area”

How to Pay for a Car — Everything You Need to Know

A car is the second most expensive real asset that most people have, and one of the biggest purchases most people ever make. It’s a big decision and can have a meaningful impact on your monthly budget and financial position. So, how do you pay for a car? We’ve compiled out best tips and tricks.

To finance, or not to finance?

Many of our customers choose to pay for their car with financing even if they have cash on hand — there are a few benefits to doing so.

  • Build your credit: Financing an auto loan can build credit in a few ways. Expanding your available credit and maintaining a history of on-time payments can improve your FICO score. Auto loans are a type of “installment credit,” which means they are paid in fixed installments over a fixed time period. Many lenders view installment credit more favorably than “revolving credit,” like credit cards. You can learn more about credit score basics at Transunion.
  • Build an emergency fund: Personal financial managers generally recommend keeping enough money to cover 3-6 months of living expenses in the bank or a liquid investment account to help deal with unexpected major life disruptions, such as illness or job loss. If you don’t have an emergency fund, it may make sense to prioritize your money to start one and avoid going into debt when unplanned expenses occur.
  • Get a better return on your money: Many Shift customers get low interest rates on their auto loans, starting at 2-4% for well qualified buyers. Instead of paying for the car in cash, some choose to invest that cash to try to earn a higher return. The average term of an auto loan is 5 years. Morningstar Index Performance Return shows that the annualized returns of major stock indices over the past 5 years range from almost 9% to over 18%.Morningstar Index Performance Return
    For example, Jane Smith is deciding between paying cash or financing her $20,000 car purchase at a 3% interest rate. If she chooses to invest, such as in a low-cost index fund, she could grow that $20,000 to more than $32,000 after five years (assume 10% rate of return, where 10% is the average long term return in the stock market). She would pay less than $1,600 in total interest for the loan. That leaves her with more than $10,000 because she decided to invest instead of paying in cash. Consult your investment advisor to see what makes sense for you.
  • Protect your investment without paying everything upfront: Almost half of our financing customers choose to include a vehicle protection plan or gap coverage in their loan. These plans can be a good way to protect against the unexpected costs of owning a car, from breakdowns to accidents. They can typically be included in your financing package, so you don’t have to pay the full cost up front.

Although there are many benefits to financing your vehicle, there are also things to keep in mind.

Cars and taxes: your guide to maximize your money. 

What to consider in deciding how to pay for a car

  • Budget for interest cost: Unlike the 0% APR loans you may have seen advertised for new cars, interest rates for used cars won’t be lower than 2-4%. This means you will pay some amount of money every year in interest. Check out our car loan calculator to understand the cost of interest for your loan.
  • Be aware of hidden fees: Prepayment fees, balloon payments, or other hidden fees can catch borrowers off guard. Prepayment fees, for example, are charged by some lenders if you decide to fully pay off your loan prior to a certain date. If you finance with Shift, you don’t have to worry – Shift financing does not include hidden fees.
  • Shop around: Different lenders may offer different interest rates and terms to the same borrower, so there is a benefit to shopping around. When you apply for financing with Shift, we instantly provide you with the best offer from multiple lenders, so you get the benefit of shopping around without the hassle.

If you’re still deciding how much you can afford, we’ve built a handy car loan calculator to help you find a car that works for your budget. Even if you can afford to pay in cash, financing may make sense if you have better uses for your money, as long as you pay your monthly installments in full and on time. If you decide to finance, you can easily apply today from your Buyer Dashboard or from shift.com.

Please be sure to read your loan contract for the full terms of your specific loan.

Image via Alexa Mazzarello

Announcing Our Latest Fundraise

It was just a little over three years ago that we sold our first Shift car in San Francisco. Since that time, we’ve become the number one used car seller in the Bay Area, grown our team by 100x, and expanded to several new markets. It’s been a wild ride.

And thanks to some recent financing by leading investors, we’re in it for the long haul. Last month, BMW iVentures, DCM, G2 Ventures, Goldman Sachs, and Highland Capital invested more than $38 million in Shift’s Series C. To date, we have raised more than $110 million. Continue reading “Announcing Our Latest Fundraise”