#425 - Tax Season 2026 Recap: What Dealers Saw and What Comes Next
About this episode
Dealers recap tax season 2026 as a mixed bag: filings were down for some, while stressed customers leaned toward voluntary surrenders and turn-ins. The hosts compare notes on why—affordability pressure, tighter budgets, and negative equity—plus how delinquency and charge-off severities are rising as older used inventory returns. A big takeaway is pricing agility: drop prices to generate leads, then reprice back up if inventory moves. They also stress flexible collections/communication and adjusting advertising spend based on real lead quality.
In this episode of the Independent Dealer Podcast, Jeff Watson and Luke Godwin break down the reality of tax season 2026 — what dealers actually saw, why customers didn't show up the way they expected, and what you need to do right now before the slow season sets in. From voluntary surrenders and charge-off severity to aged inventory strategy and ad spend adjustments, this is the post-tax debrief every independent dealer needs.What You'll Learn:Why tax season 2026 underperformed for many BHPH dealers — and what it signals about customer affordabilityHow outside lenders are competing for your buy here pay here customers with longer loan termsWhen and how to refinance or restructure a customer's payment to save an account before it turns into a repoThe right way to reprice aged inventory to generate leads fast without running to the auctionHow to tighten expenses, pay down credit lines, and fine-tune your ad spend coming out of tax seasonIf you're a buy here pay here or independent dealer trying to figure out your next move after a softer-than-expected tax season, this episode is your playbook.
Support the businesses that support the podcast:
Buckeye Risk Services - Reinsurance and wealth strategies for independent dealers. https://theindependentdealer.com/buckeyeBlytzPay - BHPH payment processing with fast funding and text-to-pay. https://theindependentdealer.com/blytzpayIturan GPS - Asset protection and customer management for BHPH and retail dealers. https://theindependentdealer.com/ituranFollow & Connect: Website: www.theindependentdealer.comFacebook Group: @independentautogroup Luke Godwin: @lukegodwin Jeff Watson: /sendtojeffwLike, subscribe, and share this with a dealer who needs to hear it.
repo
"two weeks ago we had a bunch of repo Honda Accord sitting on the lot, and they weren't the nicest in the world."
“Repo” means the car was taken back by the lender because payments weren’t made. Dealers usually have to sell these with extra caution and often at a lower price to move them.
“Repo” refers to a repossessed vehicle—typically taken back by a lender after the previous owner stops making payments. Repo cars often carry a pricing and condition risk, so dealers may need to price more aggressively to compensate for unknowns and to attract leads.
tax season
"it is why we are recording this it's late March and tax season I will officially declare tax season of 2026 done yeah you brought you brought bill out he didn't see a shadow and it was"
“Tax season” is the time of year when people get their tax refunds. That often affects how many cars dealerships sell, because more buyers have extra money to spend.
In dealer terms, “tax season” refers to the period when many consumers are more likely to buy vehicles using tax refunds. Dealers often see changes in sales volume and deal structure based on how strong or weak the refund-driven demand is.
performance was what you saw from your dealership
"let's talk about that let's talk about a little bit of how the performance was what you saw from your dealership and the ones you talked to I'll talk about mine and how ours performed some of the theory behind that and"
When they say “performance,” they mean how well the dealership did—like how many cars they sold and how good the deals were. They’re about to compare what they saw versus other dealers.
“Performance” here is dealership sales performance—how many deals were done, how strong the demand was, and how well the store executed during the period. It sets up a discussion of what drove results and what other dealers reported.
tax max program
"...total filings that I did in-house with my tax max program and total filing returns now that doesn't account for you know I'm not looking at down payment dollars..."
“Tax max program” is the dealer’s program that helps customers file taxes. The goal is usually to bring customers in and help them use their refund toward buying a car.
The “tax max program” is the dealer’s branded tax-filing or tax-refund capture initiative used to generate leads and increase the likelihood customers buy from the dealership. The speaker uses it as a measurement tool for how filings and return timing affected sales outcomes.
outside filers
"...so we have a couple deferred downs from outside filers that were still waiting on their returns to come in..."
“Outside filers” are customers who get their taxes done somewhere else, not through the dealer’s program. That can make it harder for the dealer to steer the refund toward their purchase.
“Outside filers” refers to customers who file their taxes with someone other than the dealer’s in-house program. This matters because the dealer’s ability to influence how the refund is used (and whether the customer buys there) can be reduced.
used car dealers got a majority of tax checks
"...if you go back to the early times of tax season you know it was used car dealers got a majority of tax checks because it's such a large purchase..."
The speaker is saying that in the past, most people who got tax refunds ended up spending that money at used-car dealerships. Other businesses later started competing for that same money.
This describes how, historically, used-car dealerships captured most tax-refund spending because cars are a major purchase. It also highlights how competitive pressure can shift as other industries learn to market to refund timing.
affordability issue
"...but we really do have an affordability issue um in the in the economy so you brought this up on our prep here..."
An “affordability issue” means people feel like buying a car is harder financially right now. That can make them more hesitant to commit their refund money.
An “affordability issue” in this context means consumers are feeling financial pressure, which can reduce how much they can afford to put down or how likely they are to complete a purchase. Dealers often see this show up as more guarded behavior around refunds and financing.
tax returns
"people people that get these big tax returns use this as a savings account and um and maybe they're just getting smarter that they're paying down some debt"
They’re talking about tax refunds—money people get back when they file their taxes. The key question is whether that money goes toward buying a car (like a down payment) or toward other bills and savings.
The discussion centers on how consumers use tax refunds. Dealers often see whether refunds are used to pay down debt, save, or make a down payment for a new/used vehicle.
voluntary surrenders
"if I combine that with the amount of voluntary surrenders that I've had in the last 60 days"
A voluntary surrender is when someone turns the car back in to the lender on purpose. It usually means they’re behind or can’t afford the payments anymore.
Voluntary surrender is when a borrower gives the vehicle back to the lender because they can’t keep up with payments. Dealers track it because it often precedes repossessions and signals financial stress.
negative equity
"they see that they're completely upside down negative equity-wise because I've seen some pretty large severities on my charge offs"
Negative equity means the vehicle is worth less than the amount still owed on the loan. This makes it harder for customers to trade out of a bad situation and increases the likelihood of surrender or default.
Buckeye
"make sure you guys know about Buckeye long time awesome sponsor the podcast"
Buckeye is the company sponsoring the episode. The speaker says they use Buckeye for insurance-related products that help manage risk.
Buckeye is mentioned as the sponsor and as the provider the speaker uses for reinsurance products. For listeners, this signals a specialty company involved in risk management for dealer warranty/service-contract portfolios.
reinsurance
"make sure you guys know about Buckeye long time awesome sponsor the podcast and who I use for all my reinsurance products"
Reinsurance is like “insurance for the insurance.” It helps companies protect themselves when lots of claims happen.
Reinsurance is insurance for insurance companies—used to spread risk. In the transcript, it’s discussed as a way dealers can secure portfolios (like warranties/service contracts) and reduce exposure to claims or defaults.
warranties and service contracts
"my customers have options of warranties and service contracts gap"
These are extra plans that help pay for repairs or maintenance. Dealers sell them to give buyers protection and to create additional revenue.
Warranties and service contracts are aftermarket protection products that cover repairs or maintenance beyond the vehicle’s base coverage. Dealers often bundle these with financing, and the risk/claims performance can tie into reinsurance and portfolio security.
gap
"warranties and service contracts gap I think it's just been great Jeff"
GAP helps if your car is totaled and the insurance payout doesn’t cover the full amount you still owe. It fills the “gap” so you’re not stuck paying the difference.
GAP (Guaranteed Asset Protection) covers the difference between what you owe on the loan/lease and what the vehicle is worth if it’s totaled or stolen. It’s commonly sold alongside financing and can affect dealer risk and claim exposure.
payment to income
""well that sounds self-inflicted well if he turns it in it self-inflicted but the guy makes plenty of money so it's 500 a month payment it's not a big deal right so you said you have him in a reasonable payment to income""
“Payment to income” means comparing the car payment to how much money the person makes. If the payment is a small enough share of their income, it can be considered more affordable.
“Payment to income” is a common underwriting guideline comparing the monthly payment to the borrower’s income. The speaker uses it to explain why a higher payment might still be acceptable for some customers, and how term changes can shift that affordability.
buy here pay here
""my point is this outside lenders are doing the same buy here pay here deals okay they're doing the deals they have an extended term""
Buy-here-pay-here is when the dealership both sells the car and collects the payments. The episode says other lenders are starting to offer similar financing, so BHPH dealers face more competition.
Buy-here-pay-here (BHPH) is a dealer-financed model where the dealer sells the car and also collects the customer’s payments directly. The segment argues that outside lenders are increasingly doing similar deals, which creates competition for BHPH dealers.
60 months
""we've seen terms Jeff at 60 months on a deal that I would have never gone over over 48 months right""
“60 months” means the loan is paid off over five years. They’re saying some lenders are willing to go that long, which can make the monthly payment smaller.
“60 months” is a five-year auto loan term. The speaker notes they’ve seen outside lenders offer 60-month deals that they personally wouldn’t have gone beyond, emphasizing how term length affects payment affordability.
48 months
""we've seen terms Jeff at 60 months on a deal that I would have never gone over over 48 months right and the payment instead of being 550 a month""
“48 months” means the loan is paid off over four years. The speaker is saying they wouldn’t usually go longer than that.
“48 months” is a four-year loan term. In the segment, it’s used as the speaker’s personal ceiling for term length, contrasted with longer terms offered by outside lenders.
refis and the deferments
"...where your collector can be too tough yeah and get too happy with the refis and the deferments and all that kind of stuff..."
These are ways lenders try to help when payments are tough—either by changing the loan (refi) or delaying payments (deferment). The point here is that there’s a limit to how much you can do before it hurts results.
“Refis” (refinancing) and “deferments” (delaying payments) are tools used to manage delinquent accounts. The speaker warns that being too aggressive with these can backfire, affecting metrics and long-term outcomes.
metrics
"so we do have a lot yeah back in all these metrics and making sure you're keeping an eye on everything but for me right now my delinquency is actually at an all-time low..."
“Metrics” are the numbers companies track to see how well things are going. In this case, it’s about how risky the loans are and whether customers are staying current.
“Metrics” here means the key performance and risk indicators lenders track—like delinquency rates, charge-offs, and repossession counts. Monitoring metrics helps determine whether collections strategies are working.
delinquency year over year up 1.2 percent
"...I think no nationally delinquency tick up a bit yeah I see delinquency year over year up 1.2 percent yeah and that is uh that's a big deal..."
“Year over year” means compared to last year. If delinquency is up, it usually means more people are falling behind on their car payments than before.
“Year over year” compares delinquency performance to the same period in the previous year. Even a small percentage change can matter because it signals broader credit stress and can lead to higher charge-offs or repossessions later.
charge off increase
"...and that is uh that's a big deal yeah everyone's got a charge off increase"
If charge-offs are increasing, it means the lender is recording more losses. That often happens when more borrowers fall behind and can’t recover.
An “increase” in charge-offs means more loans are being written down as losses. The transcript ties rising delinquency to rising charge-offs, which is a key indicator of worsening loan performance.
leads
"people who are not looking at the market... you need to change price if you're not getting leads on a car"
Leads are basically interested customers contacting you. If you’re not getting leads, it’s often a sign the price or listing isn’t working.
Leads are inquiries or responses from potential buyers—calls, texts, online forms, or walk-ins triggered by marketing and listing visibility. In used-car retail, lead volume is a key signal for whether pricing is aligned with the market.
aged inventory
"...liquidate some aged inventory how old did you say they were average aged um they were 60 days..."
“Aged inventory” is inventory that has been sitting unsold for a while, commonly measured in days. The longer a car sits, the harder it can be to sell at strong margins due to customer perception and market shifts.
auction price
"...there's sometimes what it takes is no need to to liquidate that car in auction price it right get it gone..."
“Auction price” is what a vehicle is expected to bring in an auction environment, which can be lower than retail but faster to convert into cash. Dealers compare auction outcomes versus holding for retail to decide the best path to sell.
Adiron GPS
"...a supporter of the podcast... Adiron GPS... they have really really great products..."
Adiron GPS is a tracking device system. Dealers use it to keep tabs on financed cars, which can help if someone stops making payments.
Adiron GPS is a GPS tracking product used in the automotive industry, especially by dealers that want to monitor vehicles. In BHPH contexts, GPS can help with vehicle recovery and risk management.
haircut
"...so I'm willing to take the haircut that to me just I don't I've never wrapped my brain around that..."
A “haircut” is a reduction from the expected value—here, accepting less than wholesale/expected proceeds to sell quickly. It’s common in wholesale/auction scenarios where speed and certainty matter.
lifetime value of the customer
"Joe Lascobo yeah Joe Lascobo told us this years ago... talking about the lifetime value of a customer... if I sell a car undervalue to a customer... they're gonna go tell their friends about it..."
It means how much money a customer will likely bring you over the years, not just from one sale. If you treat them fairly and they trust you, they’re more likely to come back for service and their next car.
“Lifetime value of the customer” is a dealership math concept: what a customer is expected to spend with you over time, not just the profit on one car sale. It’s why dealers care about pricing, trade-in offers, and service experience—because a good deal can lead to future purchases and service visits.
line of credit
"if it's sitting there you're gonna spend it you're gonna forget the you tapped your line of credit for a couple hundred grand..."
A line of credit is a borrowing account you can pull from when you need money. The point is: don’t spend the tax-season cash on fun stuff if you borrowed that money to stock up.
A “line of credit” is a revolving borrowing arrangement—dealers can draw funds as needed (often for inventory) and repay when sales come in. The speaker warns against using tax-season cash to fund lifestyle spending while the borrowed balance remains.
advertising spend
"do that and revisit your advertising spend too you know I had to go back and I looked at my lead count for last week and it dropped..."
“Advertising spend” is the budget a dealership allocates to marketing channels to generate leads. The speaker checks lead counts week over week and adjusts spend when performance drops, implying a feedback loop between marketing and sales pipeline.
lead count
"I had to go back and I looked at my lead count for last week and it dropped you know it's dropped week over week for the last four weeks..."
“Lead count” is the number of potential customer inquiries the dealership receives (often from ads, calls, forms, etc.). Tracking it week over week helps dealers decide whether marketing is working and whether to adjust budgets.
fine tune your advertising budget
"...it's fine tune your advertising spend right now and it's a time to do it because you get real numbers right now..."
It means tweaking your ad settings and spending to get better results. Instead of keeping the same ads, you adjust them based on what’s happening.
“Fine tune” means continuously adjusting ad targeting, spend levels, and campaign settings based on performance. The speaker’s point is that right now you have better data to optimize results, so you can shift money toward what’s working.
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