Consumer Car Buying Advice Blog

Consumers only have 18 days remaining in which to take advantage of the sales and excise tax deduction for new vehicles as part of the American Recovery and Reinvestment Act which is even available to consumers with bad credit.

18 days and counting

For the past 20 years, Auto Credit Express has been helping auto loan applicants with bad credit raise their FICO scores and reestablish their car credit by financing a vehicle with a bad credit auto loan. Twenty years ago, there were very few subprime lenders that would even consider financing a new car. Most lenders at that time preferred financing used vehicles. But as more national lenders got involved, new vehicles gradually became a part of most credit repair auto lender programs.

New cars have a number of advantages going for them. Apart from the obvious reliability and warranty factors, new cars often come with rebates and incentives – money that can often be used towards a down payment. And beginning in February of this year, the federal government even got involved in order to make new cars more affordable to everyone, including bad credit car loan buyers.

And while high risk borrowers will still be paying the higher interest rates required of bad credit car loans, they now have just 18 more days in which to take advantage of the current sales and excise tax deduction under the American Recovery & Reinvestment Act of 2009, which is available to most consumers who purchase a new vehicle before this portion of the act expires on January 1st, 2010.

Facts from the IRS

Earlier this year, the Internal Revenue Service released a Special Edition Tax Tip that presented nine facts about the new vehicle sales and excise tax deduction. Here are those tips:

Taxpayers who buy new motor vehicles this year may be entitled to a special tax deduction for the sales or excise taxes on those purchases when they file their 2009 federal tax returns next year. This tax break is part of the American Recovery and Reinvestment Act of 2009.

1. State and local sales and excise taxes paid on up to $49,500 of the purchase price of each qualifying vehicle are deductible.
2. Qualified motor vehicles generally include new cars, light trucks, motor homes and motorcycles.
3. To qualify for the deduction, the new cars, light trucks and motorcycles must weigh 8,500 pounds or less. Motor homes are not subject to the weight limit.
4. Purchases must occur after Feb. 16, 2009, and before Jan. 1, 2010.
5. Taxpayers who purchase new motor vehicles in states that do not have state sales taxes may be entitled to deduct other fees or taxes assessed on the purchase of those vehicles. Fees or taxes that qualify must be based on the vehicles’ sales price or as a per unit fee. These states include Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon.
6. Taxpayers who purchase qualified motor vehicles may claim the deduction when they file their 2009 tax return in 2010.
7. The deduction may not be taken on 2008 tax returns.
8. This deduction can be taken regardless of whether the buyers itemize their deductions or choose the standard deduction. Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return.
9. The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.

The Bottom Line

To make a bad credit car loan more affordable, you can take advantage of the sales and excise tax deduction by buying a new car before the January 1, 2010 deadline. And remember, you don’t have to itemize in order to take advantage of this deduction.

For more information about car loans for people with bad credit, we invite you to visit our web site at: www.autocreditexpress.com. Here you will find calculators to help you determine your budget, as well as a loan resource center that can help answer your questions. If you need additional assistance, our toll free number is listed at the bottom of every page.

For more information on this and other key tax provisions of the Recovery Act visit the official IRS Website at IRS.gov.

Tags: auto loan, bad, better business bureau, car loan quote, child support, chrysler employee discount, credit application, credit monitoring, credit score, gm, second chance car loans, subprime lenders

This entry was posted and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.