In January, the nation’s tax season began, and according to the Internal Revenue Service (IRS), the average refund check is about $3,000.

While you’re getting your W2s and other tax filing documents in place, perhaps you’re starting to think about what you’ll do with your refund check. If you’re like the 10% of tax refund recipients in this GoBankingRates survey, then you intend to use your refund check toward a major purchase like a car.

But before you head out to a dealership with your refund check in hand, (please don’t do that by the way!) I’d like to offer you a few money-smart tips to consider if you plan to use your tax refund check toward a car.

1. Do Your Research.

Before you get your tax refund, do your research. Find out what’s out there in terms of auto manufacturer incentives and programs. Sometimes the manufacturer offers rebates to the buyer, so you’ll want to take advantage of these rebates if you’re purchasing a new car.

Manufacturers are usually looking to clean out inventory in February and March, and will distribute incentives to the consumer to encourage liquidation sales. However, with the current limited inventory with new and used cars, things are a little different now. Also, figure out ahead of time what types of vehicles work for you and which do not, so you don’t make an impulse decision at the dealership.

Buyer preparation is key!

2. Know Your Budget.

When you receive your refund check, you may believe you can afford a more expensive new or used car payment, but don’t be fooled by one influx of cash!

It’s important that you don’t overextend your budget. You may be able to qualify for the car, however, you may not be able to afford it down the road.

Remember, a car payment is required every month for several years, and unexpected things may happen in your life that will ultimately shift your financial situation. Make sure you’re comfortable with the car payment commitment, knowing you may not receive a refund check next year and could even end up owing money! Be aware of your budget, and make sure you can afford what you’re buying.

Using your tax refund check to put money down on a new or used car offers you long‐term financial advantages. When you use your tax refund to put money down, your monthly payments are more affordable.

Making a down payment also makes it more attractive to the lender, because it shows you’re serious about paying for the car and they know smaller monthly payments will be easier for you to manage.

The percentage you put down depends on your personal situation, but if you have a below-average credit score, you’ll typically need to put more than the common 10% down. This allows you to pay off the debt sooner than anticipated, saving you money in the long run because your overall accrual of interest is decreased.

4. Wait for Refund.

This may sound like a no-brainer, but if you’re hoping to make a car purchase with your refund, wait until you actually receive it. Sure, it’s easy to get excited about getting in a new car, but be patient and make sure you’re receiving the amount you calculated for the refund.

Errors happen and the IRS might catch an honest mistake and send you less than you expected. Plus, waiting grants you more time to research and weigh out your options. Another area often overlooked by buyers is the additional costs associated with purchasing a car. Your insurance may go up or you may not have factored in sales tax. These extra costs also need to be considered in advance.

5. Get Maintenance Work.

If you already own a car, you might want to use your refund check toward its maintenance. Basic maintenance can become very expensive, so if your car is coming up on 60,000 miles, I recommend applying your refund check toward a 60,000‐mile service.

Depending on your owner’s manual and what’s revealed during your inspection, that might include services such as replacing spark plugs, getting an oil change, tire rotation or replacement, and replacement of timing belts or brake pads. Also, if you’ve been putting off major repairs like a complete overhaul on your suspension or another high-cost service like a new head gasket, then you may need to spend a good portion of your refund check on one repair.

The benefit of using your refund check for this purpose is that it will give your car a longer life span (or will get your car back up and running, period)!

Editor’s Note: Brian Leary is a resident of Scottsdale and senior vice president of finance and insurance for Larry H. Miller Dealerships and Total Care Auto.