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Savvy Consumer: Lots of factors will add up to new-car savings

Dealer incentives, high trade-ins, U.S. rebates and state vouchers will add up to savings

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Courtesy of GM

A federal tax credit is available for the 2009 Saturn Vue. The image is computer-generated. Courtesy of GM

If you need a new car, start doing your homework, because a unique set of consumer incentives is heading your way.

Car dealer incentives are rising, and trade-in values are high for many models because of the hot used-car market, according to Edmunds.com, a leading online automotive resource.

Adding fuel to the fire, Congress approved a $1 billion instant rebate program and Texas lawmakers authorized a $45 million voucher program. Both programs aim to retire vehicles that are gas guzzlers or heavy polluters.

Hybrid-car purchases allow additional tax credits.

The new federal program will be a welcome relief for area dealers, said Lee Chapman, president of the New Car Dealers Association of Greater Tarrant County.

"There is no doubt it’s going to have a tremendous impact in a positive way for our industry," he said. "It will drive business."

Deals are so good right now consumers should seriously consider a new car over a used one, because their overall costs can be lower, Edmunds.com spokeswoman Jeannine Fallon said.

"This is a rare time in history where that is true," she said. "You can combine several things out there right now and make it a great financial time to buy a car."

Here are some of the options you might want to consider.

'Cash for clunkers’

The federal program is scheduled to run from August through Nov. 1. It shaves $3,500 to $4,500 off the cost of a new car if two big guidelines are met:

One, your old vehicle was rated at no more than 18 miles per gallon (combined city and highway) when it was new; and two, your new vehicle gets at least 4 mpg more than the vehicle you trade in.

You don’t get additional credit for your trade-in. Trade-ins will be sold for scrap.

Dealers even handle the credit, so you get your benefit right away.

The available window for the credit is short. Administrative rules should be out by July 24 and the program is expected to start in early August. By law, the program lasts until its $1 billion budget is gone or by Nov. 1, whichever comes first. The program will subsidize the sale of about 250,000 vehicles.

Other requirements: The trade-in vehicle must be drivable, insured and registered, and less than 25 years old.

The key to benefiting from this program is trading in a vehicle that’s worth less than the credit value, Fallon said. For a list of vehicles that have a trade-in value lower than the credit, go to Edmunds.com or KBB.com.

For information on the federal program, go to the National Highway Traffic Safety Administration’s Web site, www.Cars.gov, or call the program’s toll-free number, 866-227-7891.

AirCheck Texas

If your vehicle failed the state’s emission test or is at least 10 years old, you may get a $3,000 voucher for a newer model, or $3,500 for a hybrid, in a North Texas program called AirCheck Texas. Nearly 14,000 vehicles have been bought by the state since the program began in 2007.

Money ran out this week for the program, but an additional $45 million statewide is coming in September, including $22 million for North Texas, said Jason Brown, air quality operations coordinator for the North Central Texas Council of Governments, which administers the program. There are 450 auto dealers in the area participating in the program.

The income qualifications are fairly generous. For example, a family of four can earn $63,600 after taxes and qualify. The qualifying vehicle must be drivable. Check out the program at www.DriveACleanMachine.org or call 800-898-9103. The federal and state programs might even be combined (the state’s lawyers are looking into this) for up to $8,000 off the price of a new car.

Check www.nctcog.org/airchecktexas for updates.

Federal tax breaks

State and local sales and excise taxes on a new vehicle are tax-deductible this year. Vehicles purchased from Feb. 16 this year to Jan. 1, 2010, qualify. Filers do not have to itemize deductions to qualify. The deduction is phased out at adjusted gross income of $125,000 to $135,000 for individuals and at $250,000 to $260,000 for joint filers.

Tax breaks for hybrids

Federal tax credits are still available for many hybrid models, although they have been phased out for some of the most popular, including the Toyota Prius and Honda’s hybrids. The amount of the credit is different for each vehicle, but they range from $1,550 for the Saturn Vue and Aura hybrids to $3,000 for certain models of the Ford Escape hybrid, the Mazda Tribute hybrid and the Mercury Mariner hybrid. You can find a list of vehicles and their credits by searching "qualified hybrid vehicles" on the Internal Revenue Service Web site, www. irs.gov.

Dealer incentives

Edmunds.com’s latest list of incentives shows Chrysler leading the way with $4,873 per vehicle, followed by General Motors and Ford.

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