Wednesday, February 18, 2009

Stimulus Package's Tax Credit for New Car Buyers Means Auto Shoppers Must be Prepared to Take Advantage of Savings

/PRNewswire-USNewswire/ -- The federal stimulus package signed into law by President Obama includes a $2.3 billion tax break for new car and truck buyers, which could save auto buyers hundreds of dollars. With potentially significant savings, auto shoppers should continue to do their homework in preparation for vehicle financing decisions, says AWARE (, a non-profit auto financing education group.

"This tax credit may make a new vehicle purchase more feasible for many consumers in the near future," said Eric Hoffman, spokesperson for AWARE. "Auto buyers should educate themselves about financing before making a purchase. Shoppers should maintain a solid credit track record, and shop around for financing among several sources, including banks, credit unions, financing companies and auto dealers."

As part of the stimulus package, taxpayers will be able to deduct the both local and state sales tax paid on new car purchases up to $49,500. The tax break will cover the purchase of any new car, domestic or foreign, through the end of 2009. Additionally, the deduction is "above the line," which means that it reduces the amount of a filer's taxable income. Eligible taxpayers must have an annual income below $125,000 for individuals or below $250,000 for families.

With the availability of this tax credit in the stimulus package, auto shoppers will see noteworthy savings on new car and truck purchases. Given this opportunity for savings, shoppers should continue to follow a proven approach to financing preparation, according to AWARE.

"Auto shoppers who are considering purchasing a car today or within the coming months should continue to educate themselves about the financing process," Hoffman said. "Our research has shown that consumers who are educated and informed about the auto financing process are the most satisfied with their auto financing decisions."

With the vehicle-buying opportunity presented by the stimulus package, AWARE reminds car buyers that the most important steps to prepare to finance a vehicle are:

-- Understand your credit history - When credit is tighter, as in today's
economy, consumers with a strong credit history will still obtain the
most attractive rates possible, while those with sub-optimal credit
may find fewer financing options. Check your credit rating by
obtaining your credit report from
Immediately contest any errors, settle outstanding debts, and build
your rationale for anything negative.

-- Evaluate your financial situation - Determine how much you can afford
to put down and pay on a monthly basis. A list of online auto
financing calculators and interactive budget worksheets can be found
at Once you settle on a
budget, make sure you stick to it.

-- Learn the language - Make sure you are familiar with common terms
you're likely to hear or read in the course of purchasing or financing
a vehicle, such as APR, down payment, fixed and variable-rate
financing, and on- and off-site financing. Many of these terms can be
found at

-- Shop around for financing - Given today's marketplace, shopping around
is key. Compare financing from a variety of sources, including banks,
credit unions, financing companies, and auto dealers. It's in your
best interest to use the competitive market to your advantage by
considering all of the financing options available to you, and
choosing the one that best fits your individual needs.

A host of tools, calculators, articles and other resources to help consumers sufficiently prepare for auto financing decisions can be found on AWARE's Web site ( - available in both English and Spanish.

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