If you are shopping for a new car now do not be surprised if you find picking pretty slim at your local car dealerships. The combination of Cash for Clunkers and the factory shutdowns of last spring/summer has left car dealers with very little inventory. Now car dealers are faced with a conundrum: do they sell a car at any price because of the severe lack of customers or do they try and hold some profit because they only have a few cars on their lots?
It’s a hard problem. If you are shopping for a car now and you are not too concerned about things like the car’s color, sound system or other available options you can get a tremendous deal now because some dealers will wheel and deal to move a car because they need to generate cash flow. So shop smart and you’ll save big!
Many car dealers are starting to get the cash for clunkers hangover. You see, during cash for clunkers car dealers were fat, drunk and happy – full of sales. The program was great at creating new car sales demand; the only problem with that program (and others like it) is the demand comes at the price of future sales. There is a finite number of customers out there and when a program creates an increase in immediate sales it is at the expense of future sales.
So if you are shopping now or in the near future you may find dealers with a limited amount of inventory, but they will be anxious to give you a great deal because they are becoming desperate for sales again.
As part of the economic stimulus plan that brought us Cash for Clunkers there is still some advantages left for new car buyers. Although you can not receive a Cash for Clunkers rebate you can still receive a tax break if you buy a car. If you buy a car now you can deduct state, local and excise taxes paid on up to $49,500 of your new vehicle’s purchase price. Keep in mind that if you have an adjusted income of $125,000 or more ($250,000 if filing jointly) your ability to take advantage of this program is limited.