The Senate stimulus bill includes up to $1500 in excise tax refund. Just when I was thinking that it might be time to replace the wife's clunker, I saw the fine print: it would apply only if you bought a new car. Also, Congress will let you deduct interest if you took out a car loan.Why is the rebate limited to new cars? And why should we have to take out a car loan? It seems that Congress will give you a break if do what no smart consumer should do when buying a car: buy new or buy what you can't afford. These are just inducements to consumers to make poor financial decisions.
Also, the tax complexity! No, I have to wonder: is it worth the steep depreciation and warranty-related dealer scams just to get the stimulus? Is the interest-rate deduction worth not paying cash? I wish Congress wouldn't try to make tax accountants out of all of us.
I generally buy used cars, but after my last purchase I discovered at least one good reason to buy a new car: those 10 year, 100,000 mile warranties offered by some companies are valid for the original owner only. I saved a few thousand dollars buying a used Sorento two years ago. But if it needs any serious work in the next few years, I probably would have been better off buying new and getting the long-term warranty.
ReplyDeleteAnd yes, I financed it. While it may not be "smart", it is commonplace and there are valid reasons for doing so. I spent my high school/college years driving clunkers. The last car I paid cash for ended up leaving me stranded on I-40. For me, the comfort, safety, reliability, and lower maintenance costs of a newer, more expensive vehicle outweigh the added expense of financing.
My "second owner" factory warranty expires in one year/15000 miles. I could buy a brand new 2009 model, get the full 10yr/100K warranty, and thanks to factory rebates and record low interest rates, probably end up with a lower monthly payment. The only downside would be extending my loan for two years. I'm tempted...
I actually enjoyed reading through this posting.Many thanks.
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