Sorry if I insulted your intelligence, I didn't mean to. Just needed to vent a little over a program that I can't participate in, again. To clarify, when you are self employed you pay 33% to the Fed, 2% to the State of MI and 3% to the City of Detroit. Hence 38%. It doesn't matter how much you make, if you make $5,000 or $50,000 you still pay the self employed price. I just lumped all three entities into the general category of "Government". If you are only paying 25% I am genuinely happy for you. They don't deserve even that much. The difference could be that you may: 1) be an employee, 2) have a loophole not available to me (there are a lot of them), 3) never been sued by a powerful city official that everyone was so afraid of that no attorney would touch the case causing you to lose everything you'd worked for for 40 years and be forced to flee the .45 bullets flying through your children's windows and have to buy another house at the top of the market on a variable mortgage only to have the bank refuse to refinance you before it adjusted and losing 70% plus of it's value (and climbing, and yes this really happened to us), 4) you and/or your accountant are doing something illegal with respect to the IRS (not likely), or 5) somebody helped you early on or along the way (parents, other relatives, teachers, friends, a kind boss...I never had any of that.) Since I don't know you and likely never will, none of the above is an assumption of truth or even opinion with regard to your experience, they are just random thoughts about why the tax code seems so uneven with respect to our different rates. According to the federal guidelines a family of my size and income level is just below the poverty level. It's no longer a matter of managing my money, there's so little left it only takes about 5 minutes a month. Regards.
Pending my paperwork being approved, I'm getting the Civic. Am I correct in saying the Focus costs around the same as the Civic? I got the LX for under $17k (excluding NYS tax and not including the C4C credit). Since they seemed to cost around the same, I went with the Civic. I've owned Fords, and I'm not crazy about how Fords depreciate so fast. I was going to not do the cash for clunkers and instead wait to buy a used Civic, but they don't seem to go down very low in price unless they have high mileage, so it just made sense to buy a new Civic with the $4500 credit.
Am I correct in saying the Focus costs around the same as the Civic?
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Roughly the same yes. You made a fine choice and a 2009 Civic LX for $12.5K sounds good to me.
And yes again - the depreciation on Civics is minimal as you've found out. Used 2007 & 2008 Civics are not the way to go when you can get a new one with the deal described.
"Second, if you have a tax credit you get that money whether you have income or not. All you have to do is file a tax return with all zeros for income, but list the tax credit.
Gotta love it when someone tries to correct someone else and doesn't have a clue what they are talking about. Is that you, Secretary Geithner? "
Better go back to Accounting 101. Here's the scoop from Kiplinger.com. They're those renowned financial people who put out a monthly finance magazine. You might have heard about them.
ASK KIM Tax Credit vs. Deduction By Kimberly Lankford March 19, 2007
I could never figure out the difference between a tax credit and a tax deduction. I would appreciate some clarification on this subject. Thanks.
Good question -- especially this time of year. A tax credit lowers your tax bill dollar for dollar. A deduction shaves money off your taxable income, so the value depends on your tax bracket. If you're in the 25% bracket, a $1,000 deduction lowers your tax bill by $250. But a $1,000 credit lowers the bill by the full $1,000, no matter in which bracket you are.
Just to clarify things 100%, the $3,500 or $4,500 from the government is never considered income to you and never taxed. It's just that under a tax deduction versus a tax credit, if either plan was in place, you reduce your taxable income by that amount. Then you figure your taxes.
Am I correct in saying the Focus costs around the same as the Civic?
I don't think so, not if you are looking at comparably equipped models. MSRP may be fairly close, but Focus typicaly has at least $2000-3000 in rebates. You may also get a better discount from MSRP on a Focus.
Okay, just completed a clunker deal today Tuesday. It was an interesting experience and overall I'm happy though I'm not quite sure if I actually saved money...
We had a 1997 Ford Explorer XLT with V-8 engine, rated at 14 miles per gallon. We were not in the market for a new car at all, might have purchased something used in six months to a year.
Our Ford had very low mileage- 74K- but had paint flaking off the top of one fender from 12 years of sun exposure, plus many small issues that would just rack up repair bills. Twice a wire to the emergency brake broke, meaning the car would not start unless you did this special trick. Some of the window, sunroof and power seat switches plus the headlight switch would periodically go on the fritz. The center console top next to the driver had broken off and was detached from the hinge apparatus. There was pretty bad rust underneath to the point that the steel rods where the bumper attached were literally motheaten and you could break steel off (not sure if the rest of the undercarriage was that bad.) Car fax would have shown at least one accident with bumper replacement, and maybe another one where we were hit in the rear end which caused minimal damage so we never bothered to collect from the other party's insurance.
The KBB trade in value was $2100 and supposedly private party sale was $3500 but I questioned if we could really get that much with gas prices what they are. I also didn't want to deal with ads, inspections and perhaps someone complaining to me if a problem developed with the vehicle. We also felt that the car could need a major repair at any minute. Plus we have a 20 year old driver and a 17 year old with a learner's permit and it lacks many of today's safety features.
We decided to go for a Honda CR-V to replace this vehicle which is my hubby's. We live in snow so needed to have 4WD. I was originally looking at the Fit and test drove it Thursday but felt it was just too small. Then I heard the program was in jeopardy... but on Friday they announced it was still going as I was researching models and prices. Went to a dealer on Saturday (the showroom was crazy) and it turned out to be a bait and switch, so we walked out.
Did more calling and shopping on Sunday. Some dealers were not even doing the clunker deals because they didn't have authorization codes. It seemed very strange that some dealers had them and others didn't which seems unfair.
One problem is that with all the cars flying out the door it was hard to negotiate a good price. The dealer hit me with a PDI of $150 and I just couldn't get him to eliminate it because my husband insisted on a less common color. Basically I had to pay an extra $350 so hubby could have the color he wanted but we tend to keep our cars for a long time. And the dealer refused to give me scrap value saying he had to transport the car to the scrap yard.
Then we went to actually do the clunker deal Monday... be prepared with a year's worth of insurance and a year's worth of registration. We brought our registration card but had recently renewed it so it was too short a time... luckily hadn't thrown the old card away. We weren't able to actually get all the paperwork properly submitted until Tuesday. The last wrinkle as we leave the lot is they try to turn on the car and it wouldn't start. Battery had died and it would jump start but that's not good enough. I had to replace the battery with a brand new one for $115 that will be scrapped. PAINFUL!!!
Otherwise the dealer was pretty straightforward to deal with and didn't try to sell us on high priced add ons. (Possibly was too busy to?) They told us about an extended warranty and gave us a brochure but we had time to think about it.
So... hmm my $4500 $315 goes to New York State tax $115 to the new battery let's say $2000 trade in value let's say I probably could have gotten the car $1000 cheaper if I could have really shopped it... maybe more off if I waited until the 2009 were being cleared out (but then maybe hubby's color is gone) so it comes to $3430 and my real rebate is only $1070... and even that could evaporate if I'm wrong about the trade in value or the discount.
So at the end of the day, maybe I saved a bit maybe I broke even, but I did save myself the headache of getting rid of the clunker. The program did push us to buy, so we've done our part to spur the economy (Car was 50% built in the US). Our MPG went from 14 to 22, for an 8MPG improvement, so we'll save on gas. (I'd like to have something even more fuel efficient but hubby only puts 7K on the car yearly).
Why didn't we buy American? Well, we'd love to, but I have to say our Ford Explorer just didn't hold up and was a drag to drive. Even with V-8, the acceleration was slow and the brakes were mushy with a long stopping time. I have a 1999 Honda Odyssey minivan with 90,000 miles. I have had issues with my sliding doors and they had to replace the tranny at 60,000 mi, fortunately under warranty--- there was a problem with many of the transmissions for that year--- but my Odyssey is a dream to drive. Fantastic acceleration and braking.
Hubby loves the new car. Our teens are thrilled although I am terrified to let them drive it in terms of damaging our brand new toy. But at least we know they will be driving in a vehicle equipped with ESC and all the airbags and good mechanics and when it comes to my babies, it's all worth it. Hopefully the C4C deal will be approved... because the purchase will be null and void if it isn't.
Forget about if your current car applies...but what about the new car I am considering purchasing (too many to list). Is there a site that breaks this out by manufacturer/model/engine?
Hang onto your shorts my friend. By the time this Congress and President are done, it will not pay to own any kind of business. This is the least business friendly Congress in the History of the USA. And BO is the leader of the pack of tax and spend thieves.
If you are lucky the C4C plan works for you. If not just hope a decent person was able to get $4500 of his hard earned cash back from the den of thieves.
get 1 million gas guzzlers off the road forever ( national security )
You keep posting that opinion without any evidence to back it up. While it may have some logical basis it seems like a very insignificant part of this program. If as you say it was all written by the auto makers and handed to Congress. When did the NSA or CIA get involved. I think it is your spin to justify another waste of tax dollars.
And you are wrong about the green aspect. That almost stopped the extension in the Senate and it did cut it from $4 billion to $1 billion. The greenies wield more stroke with this Congress than the NSA or CIA. If what you are saying was correct Pelosi would be history for lying about what the CIA told her.
Forget about if your current car applies...but what about the new car I am considering purchasing (too many to list). Is there a site that breaks this out by manufacturer/model/engine?
It all depends on the vehicle you are cashing in. Start here and you will get the straight scoop:
You have to take a wider look at the whole picture beginning back at the initiation of CAFE.
But more recently in July 2007 Pres Bush received the report of his 5 yr Energy Task Force. It was headed by Cheney. The report in the end specifically stated that the conclusions were not to be quoted by anyone.
What it said, without quoting, was that sources of energy were still plentiful around the world but that all the easy to find fuel had been found and was under development. All future fuel would be extremely expensive to bring to market.
We do not control these new sources of fuel and, except for Canada, nor do our 'friends'.
The American public uses too much fuel per person. That must be changed primarily by getting the American public out of their SUVs and trucks and making them drive more fuel efficient vehicles. Hmmmm. ..right after that Bush promotes a new tough CAFE standard..passed by Congress ..right after that oil skyrockets into the $140+ price range ..right after that GM and Ford announce that they are getting out of the SUV business ..right after that local fuel prices increase to $5 per gallon in some areas ..right after that the US driving public begins leaving their trucks and SUVs on the side of the road ..then Obama expands the CARB standards nationwide ..then the C4C program kills off and destroys 1 million old gas guzzlers ..then....we wait for the next event.
You can't google this report from July 2007, I've tried again several times. You can only find press articles about how the Task Force was formed in 2001. It is the official ( unstated ) policy of the US Govt to get every one of us to use less fuel in our driving. It will happen because the ones that want it to happen have the power to make it happen.
You keep posting that opinion without any evidence to back it up. While it may have some logical basis it seems like a very insignificant part of this program. If as you say it was all written by the auto makers and handed to Congress. When did the NSA or CIA get involved. I think it is your spin to justify another waste of tax dollars
This bill was in development for 5 months ever since they saw how successful the program was in Germany. In those 5 months a lot was negotiated and timing was exquisite. Notice how the program exactly coincided with the exit of GM from BK court and how it arrived just as the heaviest selling months of the year ( August ) began. It also helped empty the lots of the old 2009 models as you've said so many times.
This bill was very very well done. I know that every maker was poised to pounce when it went into effect. Our inventories of Corollas and Camrys and Prius' in July were at least double what this horrible year should have predicted....now we're down to 14 days of sales including all products. What no one saw was the massive movement of the US buying public. No one saw it.
There is a strong confluence of interests between the auto makers who want to sell new units and the national security interests that want to get older inefficient vehicles off the road forever.
I'm still confused as to why my clunker is not on the list. The 1999 2wd version is. As well as the 4wd drive versions for 1997 and before, and 2000 and later. It doesn't weigh 8500lbs so it's not on that list either although the 2500 model is.
I got a Nissan Sentra 2.0 FE SL fully loaded (except for upgrade stereo MSRP 21685) with dealer discount, cash rebate and C4C for 13232 and I think that is a good deal... Liked it SOOO much better than the Focus. And I would have rather bought a Ford, just didn't like Focus or the Fusion enough to overcome the deal on the Sentra.
'spyder, JMHO of course, but I think you are SOOOOO whacked on this CIA/NSA/Pentagon allegation as it relates to the CARS program. Uncle Sam's Canoe Club out on the big blue has one verrrrrry big purpose in life at present - KEEP THOSE OIL TANKERS MOVING! They're pretty much equipped to handle the job as proven by the last 50 years or so of dominating the high seas. To think that a CARS program is a product of their think tank down on the Potomac hinges on ludicrous. I'll admit that the big brass and hired wonks do sit around in the various war rooms war gaming every situation known to man on how to blow stuff up but developing a Cash for Clunkers idea and running with it, nahhhhhh. Just doesn't jive.
Secondly, the dependence on foreign oil will NOT be snapped by this particular government initiative. Now good ol' fashioned American ingenuity, that's another matter. Somebody, somewhere is dreamin' up something that will be getting us off this fossil fuel we've been using for so long in the not so distant future I am convinced. T. Boone is working on it. Archer Daniels Midland is working on it. And I guarantee you numerous genius' are sitting in their garages and basements bangin' heads on it right now as I write. Oil is so yesterday. Hard to say what tomorrow will bring but the CARS program doesn't even put a dent in our consumption of this black gold of Jed Clampett fame.
Agreed, and no the C4C plan does not work for me. Some used car dealers in Detroit are starting to lay off sales-people and at least one I know has closed its doors because the C4C program has caused a significant downturn in their already hurting business, apparently another added "benefit" of the program.
I'm still confused as to why my clunker is not on the list. The 1999 2wd version is. As well as the 4wd drive versions for 1997 and before, and 2000 and later. It doesn't weigh 8500lbs so it's not on that list either although the 2500 model is.
Did you send an email to fueleconomy@ornl.gov? I did recently but have not heard back.
DETROIT -- The "Cash for Clunkers" program designed by the government to stimulate new-car purchases is also boosting sales of used vehicles -- even though they don't qualify for the federal subsidies.
"We just didn't see this coming," said Don Metzner, who sells Chrysler, Jeep and Nissan brands at his Armory Automotive dealerships in Albany, N.Y. "We sold more than 80 used cars in July when we usually sell 60, and we expect to sell more than 100 used cars in August."
Auto dealers say many consumers who go into a showroom and find that their current vehicle doesn't qualify for the program decide to go ahead with a purchase anyway, often choosing used vehicles.
Mr. Metzner saw that last week. A customer came in with a 1995 Buick looking for a clunker deal, but didn't qualify because he had missed an insurance payment, Mr. Metzner recalled in a telephone interview. Instead of keeping his Buick, the customer got a 2007 Jeep Compass with 30,000 miles on it, Mr. Metzner said.
"On May 1, a 2007 domestic pickup truck was worth $14,127; on Aug. 1 it was worth $14,710," said Ricky Beggs, vice president and managing editor of Black Book, which tracks vehicle values. "Last year, wholesale auctions couldn't get rid of vehicles. Now they can't get enough." WSJ
It is the official ( unstated ) policy of the US Govt to get every one of us to use less fuel in our driving.
Doesn't make sense. How much of a decrease in fuel is this C4C program suppose to save in the U.S? I'm guessing less than 1%, from right before the program started to right after it will end . Most of these clunkers would be off the road in a junk yard in 5 years anyway. What percent of these clunkers are comprised of the overall total of vehicles on the road? Again, too low of a total to make a real difference in overall fuel consumption. For this program to be effective from a "national security" standpoint. it would need to be offered to every citizen with a automobile... not just a select few.
Second, if you have a tax credit you get that money whether you have income or not. All you have to do is file a tax return with all zeros for income, but list the tax credit.
Paul, you had described the difference between a deduction and a credit correctly, as does the Kiplinger piece. However, how did you read that piece and determine that all you have to is fill out a returns with 0?
Most credits are non-refundable meaning that they only offset your tax liability and anything over that is lost. Even the refundable ones you need some kind of income. The only one I can ever think of that you could have 0 income was the recovery rebate in 2007 for people on social security.
I guess in theory the 8K first time home buyer credit would not need to be tied to income. How about you fill out a return with 0 income and try to get the 8K? But before you do, be aware that fraud on this credit is 250,000 and/or 3 years in prison.
Consider this your free education for the day, now can we get back to clunkers?
Thanks for posting this. A few weeks ago I made the comment that I think this will drive used prices up, and all the "car guys' basically told me I was wrong.
People in the motor industry were being laid off way before C4C, just the recent closure of Chrysler dealerships resulted in many sales job losses. I try to support local made products as much as possible, but in recent years "American" cars have had some major reliability issues, and that is why they are in the mess they are in. Our clunker was a 1996 Jeep Grand Cherokee. My husband loved that car, sadly it was nothing but trouble and expense from the day we got it. The electrical problems alone cost us thousands over the years, and were never truly resolved. We keep cars for 10-15 years if possible, but that was challenging. After C4C he is now driving a Camry, just a 4-cyl workhorse which we hope to keep for a long time. My current driver is a Chrysler Town and Country. I love the cars power, and interior, but we had to have a new engine put in at 30k miles, we have had the A/C replaced twice, and it's only at 54K miles. We have a mystery leak onto the drivers and passengers legs that the dealer couldn't figure out (while under the expensive extended warranty I puchased), and the multi-disc CD playes has never worked, and according to the dealer was not covered by the warranty. This was an expensive car when we bought it. Incredibly irritating, and I was really anticipating much better durability for the money. I'm sorry, I really do try and think about the repurcussions of my auto purchases, but it is my very hard-earned money and my next minivan will more than likely be a Sienna.
I doubt that 10% of the clunkers traded in were driven very often. They were the vehicles parked along side the driveways in every subdivision in America. Literally millions of vehicles sitting that are rarely driven. My 10 neighbors have at least 20 such vehicles in their Driveways, yards and separate garages. Some are collectibles. Most are just old clunkers not worth much. This C4C has become an opportunity to get a bundle for a clunker. It could conceivably use more gas as people do tend to drive new cars more than old. I think the studies have proven that people that buy high mileage vehicles and especially hybrids put a lot more miles on them than larger gas guzzling vehicles.
I don't believe there is any consensus in the Federal or state governments to cut fuel consumption. It is totally divided into various entities. You know the road tax people are screaming for more revenue as gas sales tumble. Same with the states.
With the WH holding back the actual sales figures, how do dealers know if there is any money left. I know the VW/Hyundai/Ford dealer I visited yesterday was so relieved that we did not have a clunker to unload. He said it has been a "total nightmare". We were the only customers in the showroom for VW/Hyundai. He did not have a single VW TDI left and was not sure when he would get anymore as they are waiting on the 2010 models to arrive. Extending it now would be kind of useless. Most of the small vehicles that qualify are sold.
Extending it now would be kind of useless. Most of the small vehicles that qualify are sold.
I wondered about that very same things. I have to wonder though even if dealers had had more of a heads-up about C4C if they would have increased the inventory of smaller vehicles. I don't think anyone had any idea this would be so successful, or which buyers it would attract or what vehicles they would purchase. Hindsight?
You can disregard it as you wish but don't be surprised by the continuing efforts of our government to ensure our 'energy security' - remember those words, listen for them. The way to ensure our 'energy security' is to use less fuel...each and every one of us.
This program wasn't the creation of the governmental group...but as soon as it was proposed they hopped on it and put their quiet imprint on it. Why do you think that it's not about age or mileage driven or condition. It's about fuel usage.
A perfectly working V8 SUV or truck from the mid 90's that gets 14 mpg with only 100,000 miles on the clock is eligible for crushing. A stinking smoker from 2000 that has 150,000 miles on the clock but still gets 20 mpg does not qualify. The industry that wrote the bill doesn't give a damn one way or another, a unit gone is a unit gone, it's just another potential sale.
So who is it that would want the big fuel user off the road in favor of the more fuel efficient smoker? Believe what you wish, it doesn't really matter. If they want it, CAFE for example, then they'll get it.
Notice that you say ADM and T Boone Pickens are 'working on it'. This isn't 'working on it'...this is doing something right now this month. The country will save $5 Billion over the next 4-5 years because these vehicles are gone. We will use ~ 350 million gallons of fuel less every year now forever..on an individual basis.
It could make Ford Explorers from the 1990s much rarer, and I suppose could cause a huge run-up in their value? Most of the cash-4-clunkers are those older Explorers, resulting in a shortage.
People who still own them may be sitting on a gold mine! We will see.
I have found a couple of great replacement cars under the CFC program but they miss the 22mpg requirement by 1 MPG and I know these cars do pull even more than 22 MPG. Namely the Mazda Speed3 and Subaru Impreza WRX (turbo) ....these are wonderful cars with great reliability and deliver the MPG required.
This program is foreseen to destroy 1 million gas guzzlers in order to save about 350 million gallons of fuel every year forever ( based on 12000 mpy ). ..at $2.50 per gallon that's ~ $900 million saved every year...forever ..at $3.00 per gallon that's ~ $1 Billion saved every year...forever ..at $4.00 per gallon that's ~ $1.4 Billion saved every year...forever ..at $6.00 per gallon that's ~ $2.1 Billion saved every year...forever
These gas sucking 'clunkers' are gone forever...no one will ever be able to burn fuel in them again. All this at a cost of less $3 Billion.
If destroying one million of these dinosaurs accomplishes this....imagine what doubling the quantity would do? Tripling it? Quadrupling it?
We didn't know that there would be a sudden mad rush that would take down the system. We did have a significant number of extra fuel efficient units sent to us over the last 30-45 days...all of which are now nearly gone. I don't think the dealers knew but the auto makers certainly had an idea..they after all created the bill... and they had to begin to make the units several months before the units were sold off the lot.
Went with a friend that is interested in the VW Sportswagen TDI. No clunker for him to trade. In the process we both sat in the Golf GTI. The 2010 Golf TDI is qualified already by the CARS.GOV website to give me $4500 on my PU Truck. So if they decide to extend I may have to go for it. Really like that Golf and getting 50 MPG on the highway in a car that handles close to sports car level is a real plus for me.
LOL - anyone want to bet that by the end of this week the program will have exceeded $5B and Congress will be scrambling for money to pay for what has already been spent - and we likely will not get a full accounting of the program.
What's you guess at program cost through the end of the week:
The rear legroom with the front seat all the way back was cramped for us 6'+ guys. Headroom in back was decent. Better than the Prius I sat in recently. I would not want to go far in that back seat myself. Fine for children. Front seat headroom was very generous. Much better than Accord or Civic I sat in. It was a 4 door and very easy entry and exit to back seat. Actually less strain on my back than our LS400.
Did you ever get a response from CARS on this issue? We have a 99 4wd and cannot believe it isn't on the list. Spent 4 hours at a dealer with all the required docs in hand only to find that every chevy truck and suv is on the cars list for 2wd and 4wd except the half ton suburban. What gives???
Well I would be very surprised if we aren't way over the initial $1B plus the $2B they are trying to kick in by now. I think $10B is a little on the high side however. So I would venture to guess we are going to be somewhere between $4B and $5B.
The problem of course is, the Senate is going to approve the $2B and then they go on break until after Labor day (the House is already on break). So even though everybody in Washington will say the program is going strong, dealers will either suspend the program because they know the money won't be there or write deals pending the C4C approvals. Either way, there are going to be A LOT of people waiting in limbo and getting mad at dealers, Washington, the car industry in general, etc. I can't really see it being anymore than a short term fix for the car industry.
When we started shopping we intially looked at the VW Sportswagen TDI before buying a Camry. It really is a very nice car, a bit on the small side, but for the daily run-around with kids, big enough. The thing that put us off though was I really think they are overpriced. Still, we may be sorely tempted when my minivan dies.
The whole idea is if you maintain the truck properley. Not one of you are doing that, there is more to maintaing a car then changing the oil and rotating the tires.
But thats ok, that is for another topic. If it was $5 you hard core look at me I didn't buy a warranty so I am a genius guys would argue the point.
Look at the bright side--if dealers use caution and write up fewer C4C deals, maybe NHTSA can get caught up on processing the ones already in the pipeline and we can get an accurate count of how much money has actually been spent.
If I were running a dealership right now, I'd continue to do C4C deals, but I'd be taking it very slowly, making extra sure all the paperwork was exactly in order, and I would be very careful about replenishing my inventory. Say it's Toyota--I wouldn't over-order on the Yaris and Prius, but I'd be damn sure I had plenty of Corollas, as well as four-cylinder Camrys and RAV4s. That way, I'd have cars I could make good C4C deals on, but cars that would still sell reasonably well if the program vanished.
A short term fix with long term residuals maybe. This has really been a shot in the arm for us along with our vendors, along with the city, the county, the state, and everyone else getting a piece of the pie. This is helping allot more people then just the car dealers.
I have the same problem with my 1995 GMC Sierra 2WD. The 5.7 L automatic is not listed in the database. It is correct for all other years, except 1995. For 10 days now I have sent emails and/or called the CARS hotline. My vehicle has not yet been added. My vehicle combined mileage is 14. My dealer has not been helpful and sold the car they were holding for me, even though I agreed to buy the car with or without the CARS program.
Yes, the extended warranties discussion IS more appropriate, but I will say that all warranty sales companies who stay in business do so because they make a profit. If $795/vehicle covers their costs AND my maintenance costs, I figure with a little shopping around I can do the same.
It's a product that works for some, not for others. There are very few universally-needed products in this world, and this one isn't up there close to food & water.
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"I guess in theory the 8K first time home buyer credit would not need to be tied to income. How about you fill out a return with 0 income and try to get the 8K? But before you do, be aware that fraud on this credit is 250,000 and/or 3 years in prison."
Kathy, I called my CPA on this one just to be 100% sure. Tax credits are treated like an overpayment of your quarterly taxes. If you overpaid and/or you qualify for a tax credit that money is refunded to you after you file your tax return even if you had zero income, i.e. Social Security, Workers Compensation, tax free bonds, etc.
I also checked the IRS's site. Here's what they said about tax credits.
"So what happens if the purchaser is eligible for an $8000 credit but their entire income tax liability for the year is only $6000? This tax credit is what’s called “refundable” credit. Thus, if the eligible purchaser’s total tax liability was $6000, the IRS would send the purchaser a check for $2000. The refundable amount is the difference between $8000 credit amount and the amount of tax liability. ($8000 - $6000 = $2000) Most taxpayers determine their tax liability by referring to tables that the IRS prepares each year."
Many people like the home buyers credit, but you can only get to use it as part of your downpayment if you go FHA. Anybody else has to wait for their tax return. Most people would not purchase a new car if they had to go the tax credit route. Their payments would have been too high. Once they would have received the tax credit they would have been able to apply to their loan, but short of refinancing their loan payments would have remained the same. The subsequent payment period would only be shorter.
I am happy that the government did not got the tax credit or tax deduction route, but rather offered cash up front that could be used as a down payment. Anything else and the program would not have had the success that it did.
I won't say anything more about this subject. Anybody can do their own research at the IRS's website as I did.
Approximately 83% of the vehicles being traded in for CFC are trucks. There's a lot of cars that people tried to trade in that did not qualify as their mpg was too high. IMO those folks will simply delay their purchase and buy the normal route later in the year or even next year. Very few future sales were sacrificed What CFC did do is get a lot of gas hogs off the road as the average mpg for vehicles being traded in was about 15 mpg. What was then purchased has an average mpg of over 25. That's significant!
I had a Ford F-150 which was a holdover from when I was a commercial contractor. Now that I am no longer in that line of business as I took early retirement, I must say that I needed that truck like I needed a wart on the nose. What I did need was a good reason to get rid of it, especially the 14.5 mpg that it got. The CFC program was just that reason. I purchased a Rav4 that gets 24 mpg. While not a 10 mpg increase as is required with cars, all I needed was a 5 mpg increase in going from a truck to a SUV. It was a gift from heaven, I mean Washington.
First of all, a decent vehicle nowadays shouldn't need much maintenance in it's first 45,000 miles anyway. Handful of oil changes, maybe some wiper blades, front pads (maybe), that's it. And don't tell about topping off all the fluids!
I can do all the maintenance items you listed in my garage for less than a third of the $795 figure you mentioned.
FWIW, I added up the expenses for my 2000 Intrepid's first 45,000 miles...which I hit in about 19.5 months! $661.50 That included 12 oil changes (mostly done myself), new front brake pads (put them on myself), new rear pads (purchased, but didn't need to get put on until 51K). 4 new tires, a couple of air filters and pcv valves, and a transmission service. Only thing I skimped on, I guess, was windshield wipers, but after only 19.5 months, they were still fine.
And, that was also probably overkill on the maintenance. I probably could have gone a bit further between oil changes. Only reason I probably went through the brakes that fast was because I delivered pizzas part time back then. And I doubt if any car made today would call for a tranny service at 30K miles. Actually, my Intrepid doesn't even call for that; it was 100K "normal" and 50K "severe service", but I just felt better getting it done more often.
Comments
To clarify, when you are self employed you pay 33% to the Fed, 2% to the State of MI and 3% to the City of Detroit. Hence 38%. It doesn't matter how much you make, if you make $5,000 or $50,000 you still pay the self employed price. I just lumped all three entities into the general category of "Government". If you are only paying 25% I am genuinely happy for you. They don't deserve even that much.
The difference could be that you may:
1) be an employee, 2) have a loophole not available to me (there are a lot of them), 3) never been sued by a powerful city official that everyone was so afraid of that no attorney would touch the case causing you to lose everything you'd worked for for 40 years and be forced to flee the .45 bullets flying through your children's windows and have to buy another house at the top of the market on a variable mortgage only to have the bank refuse to refinance you before it adjusted and losing 70% plus of it's value (and climbing, and yes this really happened to us), 4) you and/or your accountant are doing something illegal with respect to the IRS (not likely), or 5) somebody helped you early on or along the way (parents, other relatives, teachers, friends, a kind boss...I never had any of that.)
Since I don't know you and likely never will, none of the above is an assumption of truth or even opinion with regard to your experience, they are just random thoughts about why the tax code seems so uneven with respect to our different rates. According to the federal guidelines a family of my size and income level is just below the poverty level. It's no longer a matter of managing my money, there's so little left it only takes about 5 minutes a month. Regards.
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Roughly the same yes. You made a fine choice and a 2009 Civic LX for $12.5K sounds good to me.
And yes again - the depreciation on Civics is minimal as you've found out. Used 2007 & 2008 Civics are not the way to go when you can get a new one with the deal described.
Gotta love it when someone tries to correct someone else and doesn't have a clue what they are talking about. Is that you, Secretary Geithner? "
Better go back to Accounting 101. Here's the scoop from Kiplinger.com. They're those renowned financial people who put out a monthly finance magazine. You might have heard about them.
http://www.kiplinger.com/columns/ask/archive/2007/q0319.htm
ASK KIM
Tax Credit vs. Deduction
By Kimberly Lankford
March 19, 2007
I could never figure out the difference between a tax credit and a tax deduction. I would appreciate some clarification on this subject. Thanks.
Good question -- especially this time of year. A tax credit lowers your tax bill dollar for dollar. A deduction shaves money off your taxable income, so the value depends on your tax bracket. If you're in the 25% bracket, a $1,000 deduction lowers your tax bill by $250. But a $1,000 credit lowers the bill by the full $1,000, no matter in which bracket you are.
Just to clarify things 100%, the $3,500 or $4,500 from the government is never considered income to you and never taxed. It's just that under a tax deduction versus a tax credit, if either plan was in place, you reduce your taxable income by that amount. Then you figure your taxes.
I don't think so, not if you are looking at comparably equipped models. MSRP may be fairly close, but Focus typicaly has at least $2000-3000 in rebates. You may also get a better discount from MSRP on a Focus.
We had a 1997 Ford Explorer XLT with V-8 engine, rated at 14 miles per gallon. We were not in the market for a new car at all, might have purchased something used in six months to a year.
Our Ford had very low mileage- 74K- but had paint flaking off the top of one fender from 12 years of sun exposure, plus many small issues that would just rack up repair bills. Twice a wire to the emergency brake broke, meaning the car would not start unless you did this special trick. Some of the window, sunroof and power seat switches plus the headlight switch would periodically go on the fritz. The center console top next to the driver had broken off and was detached from the hinge apparatus. There was pretty bad rust underneath to the point that the steel rods where the bumper attached were literally motheaten and you could break steel off (not sure if the rest of the undercarriage was that bad.) Car fax would have shown at least one accident with bumper replacement, and maybe another one where we were hit in the rear end which caused minimal damage so we never bothered to collect from the other party's insurance.
The KBB trade in value was $2100 and supposedly private party sale was $3500 but I questioned if we could really get that much with gas prices what they are. I also didn't want to deal with ads, inspections and perhaps someone complaining to me if a problem developed with the vehicle. We also felt that the car could need a major repair at any minute. Plus we have a 20 year old driver and a 17 year old with a learner's permit and it lacks many of today's safety features.
We decided to go for a Honda CR-V to replace this vehicle which is my hubby's. We live in snow so needed to have 4WD. I was originally looking at the Fit and test drove it Thursday but felt it was just too small. Then I heard the program was in jeopardy... but on Friday they announced it was still going as I was researching models and prices. Went to a dealer on Saturday (the showroom was crazy) and it turned out to be a bait and switch, so we walked out.
Did more calling and shopping on Sunday. Some dealers were not even doing the clunker deals because they didn't have authorization codes. It seemed very strange that some dealers had them and others didn't which seems unfair.
One problem is that with all the cars flying out the door it was hard to negotiate a good price. The dealer hit me with a PDI of $150 and I just couldn't get him to eliminate it because my husband insisted on a less common color. Basically I had to pay an extra $350 so hubby could have the color he wanted but we tend to keep our cars for a long time. And the dealer refused to give me scrap value saying he had to transport the car to the scrap yard.
Then we went to actually do the clunker deal Monday... be prepared with a year's worth of insurance and a year's worth of registration. We brought our registration card but had recently renewed it so it was too short a time... luckily hadn't thrown the old card away. We weren't able to actually get all the paperwork properly submitted until Tuesday. The last wrinkle as we leave the lot is they try to turn on the car and it wouldn't start. Battery had died and it would jump start but that's not good enough. I had to replace the battery with a brand new one for $115 that will be scrapped. PAINFUL!!!
Otherwise the dealer was pretty straightforward to deal with and didn't try to sell us on high priced add ons. (Possibly was too busy to?) They told us about an extended warranty and gave us a brochure but we had time to think about it.
So... hmm my $4500
$315 goes to New York State tax
$115 to the new battery
let's say $2000 trade in value
let's say I probably could have gotten the car $1000 cheaper if I could have really shopped it... maybe more off if I waited until the 2009 were being cleared out (but then maybe hubby's color is gone)
so it comes to $3430 and my real rebate is only $1070...
and even that could evaporate if I'm wrong about the trade in value or the discount.
So at the end of the day, maybe I saved a bit maybe I broke even, but I did save myself the headache of getting rid of the clunker. The program did push us to buy, so we've done our part to spur the economy (Car was 50% built in the US). Our MPG went from 14 to 22, for an 8MPG improvement, so we'll save on gas. (I'd like to have something even more fuel efficient but hubby only puts 7K on the car yearly).
Why didn't we buy American? Well, we'd love to, but I have to say our Ford Explorer just didn't hold up and was a drag to drive. Even with V-8, the acceleration was slow and the brakes were mushy with a long stopping time. I have a 1999 Honda Odyssey minivan with 90,000 miles. I have had issues with my sliding doors and they had to replace the tranny at 60,000 mi, fortunately under warranty--- there was a problem with many of the transmissions for that year--- but my Odyssey is a dream to drive. Fantastic acceleration and braking.
Hubby loves the new car. Our teens are thrilled although I am terrified to let them drive it in terms of damaging our brand new toy. But at least we know they will be driving in a vehicle equipped with ESC and all the airbags and good mechanics and when it comes to my babies, it's all worth it. Hopefully the C4C deal will be approved... because the purchase will be null and void if it isn't.
It has little or nothing to do with any greenie program except tangentially
Yes of course there is an environmental benefit but the program was not designed around that at all. It was designed to be upheld by two pillars.
1. boost automotive sales ( stimulate business )
2. get 1 million gas guzzlers off the road forever ( national security )
If you are lucky the C4C plan works for you. If not just hope a decent person was able to get $4500 of his hard earned cash back from the den of thieves.
You keep posting that opinion without any evidence to back it up. While it may have some logical basis it seems like a very insignificant part of this program. If as you say it was all written by the auto makers and handed to Congress. When did the NSA or CIA get involved. I think it is your spin to justify another waste of tax dollars.
And you are wrong about the green aspect. That almost stopped the extension in the Senate and it did cut it from $4 billion to $1 billion. The greenies wield more stroke with this Congress than the NSA or CIA. If what you are saying was correct Pelosi would be history for lying about what the CIA told her.
It all depends on the vehicle you are cashing in. Start here and you will get the straight scoop:
http://www.fueleconomy.gov/feg/CarsSearchIntro.shtml
But more recently in July 2007 Pres Bush received the report of his 5 yr Energy Task Force. It was headed by Cheney. The report in the end specifically stated that the conclusions were not to be quoted by anyone.
What it said, without quoting, was that sources of energy were still plentiful around the world but that all the easy to find fuel had been found and was under development. All future fuel would be extremely expensive to bring to market.
We do not control these new sources of fuel and, except for Canada, nor do our 'friends'.
The American public uses too much fuel per person. That must be changed primarily by getting the American public out of their SUVs and trucks and making them drive more fuel efficient vehicles. Hmmmm.
..right after that Bush promotes a new tough CAFE standard..passed by Congress
..right after that oil skyrockets into the $140+ price range
..right after that GM and Ford announce that they are getting out of the SUV business
..right after that local fuel prices increase to $5 per gallon in some areas
..right after that the US driving public begins leaving their trucks and SUVs on the side of the road
..then Obama expands the CARB standards nationwide
..then the C4C program kills off and destroys 1 million old gas guzzlers
..then....we wait for the next event.
You can't google this report from July 2007, I've tried again several times. You can only find press articles about how the Task Force was formed in 2001. It is the official ( unstated ) policy of the US Govt to get every one of us to use less fuel in our driving. It will happen because the ones that want it to happen have the power to make it happen.
This bill was in development for 5 months ever since they saw how successful the program was in Germany. In those 5 months a lot was negotiated and timing was exquisite. Notice how the program exactly coincided with the exit of GM from BK court and how it arrived just as the heaviest selling months of the year ( August ) began. It also helped empty the lots of the old 2009 models as you've said so many times.
This bill was very very well done. I know that every maker was poised to pounce when it went into effect. Our inventories of Corollas and Camrys and Prius' in July were at least double what this horrible year should have predicted....now we're down to 14 days of sales including all products. What no one saw was the massive movement of the US buying public. No one saw it.
There is a strong confluence of interests between the auto makers who want to sell new units and the national security interests that want to get older inefficient vehicles off the road forever.
I'd love to get rid of this thing.....
Secondly, the dependence on foreign oil will NOT be snapped by this particular government initiative. Now good ol' fashioned American ingenuity, that's another matter. Somebody, somewhere is dreamin' up something that will be getting us off this fossil fuel we've been using for so long in the not so distant future I am convinced. T. Boone is working on it. Archer Daniels Midland is working on it. And I guarantee you numerous genius' are sitting in their garages and basements bangin' heads on it right now as I write. Oil is so yesterday. Hard to say what tomorrow will bring but the CARS program doesn't even put a dent in our consumption of this black gold of Jed Clampett fame.
Ya'll come back now, ya hear!
Did you send an email to fueleconomy@ornl.gov? I did recently but have not heard back.
"We just didn't see this coming," said Don Metzner, who sells Chrysler, Jeep and Nissan brands at his Armory Automotive dealerships in Albany, N.Y. "We sold more than 80 used cars in July when we usually sell 60, and we expect to sell more than 100 used cars in August."
Auto dealers say many consumers who go into a showroom and find that their current vehicle doesn't qualify for the program decide to go ahead with a purchase anyway, often choosing used vehicles.
Mr. Metzner saw that last week. A customer came in with a 1995 Buick looking for a clunker deal, but didn't qualify because he had missed an insurance payment, Mr. Metzner recalled in a telephone interview. Instead of keeping his Buick, the customer got a 2007 Jeep Compass with 30,000 miles on it, Mr. Metzner said.
"On May 1, a 2007 domestic pickup truck was worth $14,127; on Aug. 1 it was worth $14,710," said Ricky Beggs, vice president and managing editor of Black Book, which tracks vehicle values. "Last year, wholesale auctions couldn't get rid of vehicles. Now they can't get enough."
WSJ
Doesn't make sense. How much of a decrease in fuel is this C4C program suppose to save in the U.S? I'm guessing less than 1%, from right before the program started to right after it will end . Most of these clunkers would be off the road in a junk yard in 5 years anyway. What percent of these clunkers are comprised of the overall total of vehicles on the road? Again, too low of a total to make a real difference in overall fuel consumption. For this program to be effective from a "national security" standpoint. it would need to be offered to every citizen with a automobile... not just a select few.
Paul, you had described the difference between a deduction and a credit correctly, as does the Kiplinger piece. However, how did you read that piece and determine that all you have to is fill out a returns with 0?
Most credits are non-refundable meaning that they only offset your tax liability and anything over that is lost. Even the refundable ones you need some kind of income. The only one I can ever think of that you could have 0 income was the recovery rebate in 2007 for people on social security.
I guess in theory the 8K first time home buyer credit would not need to be tied to income. How about you fill out a return with 0 income and try to get the 8K?
But before you do, be aware that fraud on this credit is 250,000 and/or 3 years in prison.
Consider this your free education for the day, now can we get back to clunkers?
I don't believe there is any consensus in the Federal or state governments to cut fuel consumption. It is totally divided into various entities. You know the road tax people are screaming for more revenue as gas sales tumble. Same with the states.
With the WH holding back the actual sales figures, how do dealers know if there is any money left. I know the VW/Hyundai/Ford dealer I visited yesterday was so relieved that we did not have a clunker to unload. He said it has been a "total nightmare". We were the only customers in the showroom for VW/Hyundai. He did not have a single VW TDI left and was not sure when he would get anymore as they are waiting on the 2010 models to arrive. Extending it now would be kind of useless. Most of the small vehicles that qualify are sold.
I wondered about that very same things. I have to wonder though even if dealers had had more of a heads-up about C4C if they would have increased the inventory of smaller vehicles. I don't think anyone had any idea this would be so successful, or which buyers it would attract or what vehicles they would purchase. Hindsight?
This program wasn't the creation of the governmental group...but as soon as it was proposed they hopped on it and put their quiet imprint on it. Why do you think that it's not about age or mileage driven or condition. It's about fuel usage.
A perfectly working V8 SUV or truck from the mid 90's that gets 14 mpg with only 100,000 miles on the clock is eligible for crushing. A stinking smoker from 2000 that has 150,000 miles on the clock but still gets 20 mpg does not qualify. The industry that wrote the bill doesn't give a damn one way or another, a unit gone is a unit gone, it's just another potential sale.
So who is it that would want the big fuel user off the road in favor of the more fuel efficient smoker? Believe what you wish, it doesn't really matter. If they want it, CAFE for example, then they'll get it.
Notice that you say ADM and T Boone Pickens are 'working on it'. This isn't 'working on it'...this is doing something right now this month. The country will save $5 Billion over the next 4-5 years because these vehicles are gone. We will use ~ 350 million gallons of fuel less every year now forever..on an individual basis.
People who still own them may be sitting on a gold mine! We will see.
This program is foreseen to destroy 1 million gas guzzlers in order to save about 350 million gallons of fuel every year forever ( based on 12000 mpy ).
..at $2.50 per gallon that's ~ $900 million saved every year...forever
..at $3.00 per gallon that's ~ $1 Billion saved every year...forever
..at $4.00 per gallon that's ~ $1.4 Billion saved every year...forever
..at $6.00 per gallon that's ~ $2.1 Billion saved every year...forever
These gas sucking 'clunkers' are gone forever...no one will ever be able to burn fuel in them again. All this at a cost of less $3 Billion.
If destroying one million of these dinosaurs accomplishes this....imagine what doubling the quantity would do? Tripling it? Quadrupling it?
LOL - anyone want to bet that by the end of this week the program will have exceeded $5B and Congress will be scrambling for money to pay for what has already been spent - and we likely will not get a full accounting of the program.
What's you guess at program cost through the end of the week:
* $10B
(too bad there is no poll function here)
http://money.cnn.com/galleries/2009/autos/0908/gallery.cash_for_clunker_trade_in- /index.html
I am not sure this is good for your company. How many have been approved?
The best is we have 130+ reimbursements already!
Then you could have bough a plan that suits your driving habits for about $425. Would have saved you over $200
The problem of course is, the Senate is going to approve the $2B and then they go on break until after Labor day (the House is already on break). So even though everybody in Washington will say the program is going strong, dealers will either suspend the program because they know the money won't be there or write deals pending the C4C approvals. Either way, there are going to be A LOT of people waiting in limbo and getting mad at dealers, Washington, the car industry in general, etc. I can't really see it being anymore than a short term fix for the car industry.
But thats ok, that is for another topic. If it was $5 you hard core look at me I didn't buy a warranty so I am a genius guys would argue the point.
If I were running a dealership right now, I'd continue to do C4C deals, but I'd be taking it very slowly, making extra sure all the paperwork was exactly in order, and I would be very careful about replenishing my inventory. Say it's Toyota--I wouldn't over-order on the Yaris and Prius, but I'd be damn sure I had plenty of Corollas, as well as four-cylinder Camrys and RAV4s. That way, I'd have cars I could make good C4C deals on, but cars that would still sell reasonably well if the program vanished.
Actually, that's all the factory recommends on the 2000 Ranger I cited as an example.
It's a product that works for some, not for others. There are very few universally-needed products in this world, and this one isn't up there close to food & water.
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But before you do, be aware that fraud on this credit is 250,000 and/or 3 years in prison."
Kathy, I called my CPA on this one just to be 100% sure. Tax credits are treated like an overpayment of your quarterly taxes. If you overpaid and/or you qualify for a tax credit that money is refunded to you after you file your tax return even if you had zero income, i.e. Social Security, Workers Compensation, tax free bonds, etc.
I also checked the IRS's site. Here's what they said about tax credits.
"So what happens if the purchaser is eligible for an $8000 credit but their entire income tax liability for the year is only $6000?
This tax credit is what’s called “refundable” credit. Thus, if the eligible purchaser’s total tax liability was $6000, the IRS would send the purchaser a check for $2000. The refundable amount is the difference between $8000 credit amount and the amount of tax liability. ($8000 - $6000 = $2000) Most taxpayers determine their tax liability by referring to tables that the IRS prepares each year."
Many people like the home buyers credit, but you can only get to use it as part of your downpayment if you go FHA. Anybody else has to wait for their tax return. Most people would not purchase a new car if they had to go the tax credit route. Their payments would have been too high. Once they would have received the tax credit they would have been able to apply to their loan, but short of refinancing their loan payments would have remained the same. The subsequent payment period would only be shorter.
I am happy that the government did not got the tax credit or tax deduction route, but rather offered cash up front that could be used as a down payment. Anything else and the program would not have had the success that it did.
I won't say anything more about this subject. Anybody can do their own research at the IRS's website as I did.
I had a Ford F-150 which was a holdover from when I was a commercial contractor. Now that I am no longer in that line of business as I took early retirement, I must say that I needed that truck like I needed a wart on the nose. What I did need was a good reason to get rid of it, especially the 14.5 mpg that it got. The CFC program was just that reason. I purchased a Rav4 that gets 24 mpg. While not a 10 mpg increase as is required with cars, all I needed was a 5 mpg increase in going from a truck to a SUV. It was a gift from heaven, I mean Washington.
I can do all the maintenance items you listed in my garage for less than a third of the $795 figure you mentioned.
FWIW, I added up the expenses for my 2000 Intrepid's first 45,000 miles...which I hit in about 19.5 months! $661.50 That included 12 oil changes (mostly done myself), new front brake pads (put them on myself), new rear pads (purchased, but didn't need to get put on until 51K). 4 new tires, a couple of air filters and pcv valves, and a transmission service. Only thing I skimped on, I guess, was windshield wipers, but after only 19.5 months, they were still fine.
And, that was also probably overkill on the maintenance. I probably could have gone a bit further between oil changes. Only reason I probably went through the brakes that fast was because I delivered pizzas part time back then. And I doubt if any car made today would call for a tranny service at 30K miles. Actually, my Intrepid doesn't even call for that; it was 100K "normal" and 50K "severe service", but I just felt better getting it done more often.