Economics

I CAN HAZ BEEMER?

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Thanks, Uncle Stimulus!

The economic stimulus bill just got a whole lot more interesting for automakers and car buyers alike, as a proposal to make interest on auto loans deductible has been voted in. The proposal, which was championed by the National Automotive Dealer Association, was voted in by a bi-partisan 71-36 vote. If the $800 billion stimulus bill passes the Senate and this provision survives, car buyers will be able to write off auto loan interest on their taxes, saving about $1,500 on a $25,000 car purchase. The new legislation will mark the first time since 1986 that car buyers will be able to write off their car loan interest.

Link via Instapundit, who makes a related suggestion: "Hey, let's support the housing market by making home mortgage interest a refundable tax credit!"

UPDATE/QUESTION: Since stuff like this always makes me feel even more like an outlier, am I the only here who has never taken out a car loan? 

NEXT: No New Deals

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  1. This may have a stimulative effect, and if it does, aren’t people more likely to buy cars not made in Detroit as they have been doing more and more for the past 30 years?

  2. The Austrian suggestion that booms are caused by easy credit and the misinvestment that encourages, NO ONE among policymakers is paying attention to that now, right?

    Just wanted to make sure. ’cause it looks like they think the problem is a lack of easy credit.

  3. Goddamnit I paid cash for my $25,000 car last year! Where’s my stimulus?

  4. Based on THOMAS, it’s an ‘above the line’ deduction as well (top shelf as far as deductions go, mortgage interest doesn’t even get this treatment). Would also be retroactive for any purchase made after Nov 12, 2008 (sorry you veteran’s day sale suckers!), up to the end of this year and re-finances are elligible as well.

  5. Does this apply to existing loans? I still have a year and a half of payments left on my car loan.

  6. The American people have no use for rich capitalists like you, Warren.

  7. Generally, when someone wants to refund some kind of tax (any kind, really) — I’m totally in.

  8. I just paid my (other) car off last year. My truck has been paid off for over seven years. What a sucker I am for being responsible.

  9. “Hey, let’s support the housing market by making home mortgage interest a refundable tax credit!”

    Stupid to stop there. If you make the entire mortgage payment a refundable tax credit, you’ve solved the housing glut and the problem people have making mortgage payments too!!

  10. I paid off my car loan. I am debt free, with no loans, no mortgages, paying off credit cards every month. I feel like such a chump. Someone tell me where Keynes is buried so I can go dig him up and kick him in his decomposing nads.

  11. I have never borrowed money for a car and I can’t imagine that I ever will.

  12. I’ve owned three cars, only one on credit (and I’ll still paid half of it in cash). My first car though, was a 9 year old POS Ford Taurus that I bought for $1500. (and this was *after* college). I paid more for the mountain bike i bought a few months later.

  13. Good lord. This gets stranger every day.

    So what’s the libertarian thing to do if this passes? Take the credit and deny the State the income, or refuse the credit in a principled stand agains all things bailout-y?

  14. Hey Brandy-

    I have crazy student loan debt and a mortgage, but I make my payments on time so nobody’s helping me out either. Oh, and on a side note, is the interest only deductible below a certain income level? That’s how it is for student loans.

  15. Oh, and db, I’m not sure if it counts as a bailout if it’s your money in the first place.

  16. I’ve never had a car loan and so long as I’m married to my hub, who owns an auto shop, I never will have a car loan. We buy used cars for cash and he fixes them up.

    The hub doesn’t believe in new cars the way Richard Dawkins doesn’t believe in God.

  17. is the interest only deductible below a certain income level?

    “(B) DOLLAR LIMITATION.–The aggregate amount of indebtedness treated as described in subparagraph (A) for any period shall not exceed $49,500 ($24,750 in the case of a separate return by a married individual).
    “(C) INCOME LIMITATION.–The amount otherwise treated as interest under subparagraph (A) for any taxable year (after the application of subparagraph (B)) shall be reduced (but not below zero) by the amount which bears the same ratio to the amount which is so treated as–
    “(i) the excess (if any) of–
    “(I) the taxpayer’s modified adjusted gross income for such taxable year, over
    “(II) $125,000 ($250,000 in the case of a joint return), bears to
    “(ii) $10,000.

    So I think that means the phaseout starts at $125K/250K, and deductable interest gets reduced by 12.5 or 25 bucks for every dollar in AGI over that.

  18. Sure pass this right after I make my last payment. Just like passing more tax credits for kids right when mine turned 18 and didn’t qualify. All the while we managed on our own why the fuck shouldn’t everyone else. It is easier and easier to see why politicians need so much fucking protection the line of people who fantasize about picking them off must be very very very long. How can you suddenly keep changing the games rules and fucking over everyone that has been playing by them? Fuck you government!

  19. I have never taken out a car loan. The amount of car I buy is commensurate with the amount of money I have in the bank. Back in the day, this practice resulted in me driving some real beaters. Being debt-free is nice, but apparently I’m a sucker.

  20. I’ve taken out car loans, but I buy only used. In my twenty years of owning cars, I’ve owned two. A used 1985 Accord and a used 1995 Accord. I’m still driving the latter, which will be running until the sun expands.

  21. Oh and when I go to buy the wife a new car I assure you it won’t be made by the little 2.5!

  22. I only buy used, with cash. And my car is pretty nice. A great 10 year old car beats an okay new car, and is generally cheaper.

  23. I financed all my cars through Mom & Pop auto loans. I get below prime interest and payment forgiveness. In fact I just send them however much I feel like each month.

  24. Wow, I guess I waited until the right time to not only buy a house, but buy a car as well.

    Sweet!

    I’m still waiting on my grant to start a local newspaper.

  25. “Stupid to stop there. If you make the entire mortgage payment a refundable tax credit, you’ve solved the housing glut and the problem people have making mortgage payments too!!”

    Why stop there.

    Pay arsonists to burn down houses.

    That solves the unemployment problem and the housing glut at the same time!

  26. The surest way to know that the American people are about to be completely screwed over is upon hearing the phrase “passed with bi-partisan support.”

    Also, I’ve never taken out a car loan either.

  27. @Warren:

    My parents sold me their old car for $1 when I graduated from college. I still drive it to this day, much to their shock. Them Japanese cars last forever. Fuck GM.

  28. “UPDATE/QUESTION: Since stuff like this always makes me feel even more like an outlier, am I the only here who has never taken out a car loan? ”

    Does that mean you’ve never bought a car or always pay cash for the cars you bought?

  29. My last car, I took out a 3 year auto loan through Chrysler Financial at 2.9%, which was pretty reasonable. I’m currently leasing. Where’s my bailout?

    And I forsee the typical debate about whether a tax credit only applies to “American” cars, what exactly is an “American” car, etc.

  30. You’re not the only one who’s never bought a car on time. Here in New York City, lenders insist on comprehensive insurance (i.e. including collision & theft) for a car loan, and the rates are ridiculous — like buying the car over again every 2.5 years. Therefore there are only 2 affordable options for buying a car on time here:

    1. register the car elsewhere, or
    2. lease to buy.

    And, since the insurance is figured into the lease terms, even that is not too affordable unless in a short time you exercise your buy with cash.

  31. Fuck that with highly polished brass knobs on.

    In ’04 I got a 0% loan on my car because 1: the dealer really wanted to sell me a car, and 2: I fucking qualified for that shit. I had an 800+ credit rating that I worked years on, paying off loans on time, no late payments, saving. You know, delayed gratification stuff. Something these fuckwads in Congress have no concept of.

    I’m done fighting this stimulus package. Where’s my fucking check?

    *elbows small child out of the way*

  32. Oh and when I go to buy the wife a new car I assure you it won’t be made by the little 2.5!

    I will, but only if it’s a Vauxhall.

    I’ve got 2 car loans out now, but that’s only because the wife insists on driving cars into the ground.

  33. Yeah I got a 0% loan from Ford Credit on a pickup I bought.

    Where’s my check too?

  34. Since stuff like this always makes me feel even more like an outlier, am I the only here who has never taken out a car loan?

    No, I know someone who drives a K car, too. And without a sense of irony.

  35. We’re drifting towards buying a new (second) car, and maybe we’ll take advantage. Of course it won’t be an American 2.5 car because they don’t make what we’re looking for. At least not anything worth buying…
    We bought our last car with a loan only because the interest rate on the loan was lower than we were earning in our savings account at the time. And when my wife had a change in circumstances that lowered our income we paid it off immediately. So maybe that’s half-way…

  36. Of course it won’t be an American 2.5 car because they don’t make what we’re looking for.

    Too bad, you already bought one. Well, let me rephrase, you paid for one (or two, or three) but you’ll never take delivery on it. It was for teh stimulus.

  37. Obama’s desire to “fix” our economy seems at odds with his desire to pass so-called “green” legislation. “Let’s put more dirty cars on the road!” Seems to me there could be a lot of money to be made in green transportation!

    How about a tax credit for bicycle commuters?!

  38. SUCKERS. THE URKOBOLD DOES NOT BUY CARS. HE SIMPLY HAS THEM LIBERATED FROM THEIR PREVIOUS OWNERS.

    THERE AIN’T A REPO MAN THE URKOBOLD KNOWS THAT DON’T TAKE SPEED.

  39. “Since stuff like this always makes me feel even more like an outlier, am I the only here who has never taken out a car loan?”

    And you call yourself a Californian?!

    …between you never having taken out a car loan and Cavanaugh using public transportation, I don’t know which one’s worse.

  40. Obama’s desire to “fix” our economy seems at odds with his desire to pass so-called “green” legislation.

    “Green legislation” will be largely a campaign point. Now that the economy is really starting to tank, Global Warming Zealots are politely being handed their hats and not being invited back to next years party.

  41. No, I know someone who drives a K car, too.

    I haven’t driven that thing for years, on account of burning it to a crisp (unintentionally) on Sunset Blvd. at 6 in the morning. Flames went 20 feet high as the sun rose over Silver Lake. It was beautiful.

  42. I haven’t driven that thing for years, on account of burning it to a crisp (unintentionally) on Sunset Blvd. at 6 in the morning.

    And she looked at least 16 at the time? That story’s gotta have something dark behind it.

    I learned you drove a K car in my favoritist article you ever wrote.

  43. Paul,
    “No, I know someone who drives a K car, too. And without a sense of irony.”

    I own (and drive) 4 K-car derivitives (Chryler LeBaron’s from the 90’s). And without a sense of irony.

  44. I would never buy a car on credit.I did buy a new car for cash once but every other one was a used private party cash purchase.I don’t like paying sales tax much less interest on an auto purchase.Big insurance savings when you own it outright too.

    I suppose if I became destitute and just started to regain my footing I might buy a cheap beater on credit to avoid riding the bus with other poor people.As an American I’d rather be homeless than w/o personal motorized transportation.

  45. I own a ’99 Accord coupe bought used. I love it, and it is oh so reliable. And made in America, too!

    I too will never by anything from Detroit so long as they’re sucking down my tax money. Sorry, Michiglanders!

  46. Ugh, K-cars. What pieces of shit.

  47. SIV, I get the sense from this and previous posts you’re a fellow car guy.

    Is your fleet Detroit Iron, or Japanese-via-Alabama transplant?

  48. I don’t discriminate BDB.Except against automatic transmissions, yuck.

  49. As an American I’d rather be homeless than w/o personal motorized transportation.

    Dude, if you have motorized transportation, you ain’t homeless.

  50. Agreed, slushboxes blow.

  51. If someone could combine Detroit styling and innovation with Japanese reliability at Korean prices, that would be the Jesus Car.

  52. Don’t forget the torque BDB. Other automakers may have decent HP but USA rules in torque.
    We are the 1/4 mile country.

  53. If someone could combine Detroit styling and innovation with Japanese reliability at Korean prices, that would be the Jesus Car.

    disagree. If someone could combine European and Japanese styling and innovation with Japanese riliability at Korean prices, that would be the Jesus Car.

    I was looking at the switches and controls inside my wife’s (much cheaper) Toyota Matrix, and they’re just better than my ’04 Liberty. And I love my Liberty, don’t get me wrong. But there’s something about the Americans and their desire to build cab controls as if they’re going to be operated by my octagenarian Dad who can’t see or feel. Or… maybe they are… hmmm…..

  54. Exterior styling Paul. American car designers can do a good job on interiors but then they are murdered by the accountants and replaced with cheap plastic crap mounted in the same place as every other car in the line-up.

  55. I learned you drove a K car in my favoritist article you ever wrote.

    I appreciate the comment & reminder, though my re-reading was almost ruined by that awful closing sentence. Fun fact: 90% of that piece is language cut and pasted from outgoing e-mails I sent at the time, mostly to Ken Layne.

  56. Sorry SIV, I’m talking about both. There are few American cars that have any styling which catches my eye.

    I know we’re getting into aesthetics which is a dead-end debate. But American cars (to me) are stodgy, old-fashioned, and lack the eye-catching style that push the envelope. American cars are what I call ‘safe styling’. No one hates them, but no one really loves them either.

    Chrysler was the only American car company taking chances (and doing a good job) on styling.

  57. appreciate the comment & reminder, though my re-reading was almost ruined by that awful closing sentence.

    I admit a contextual bias in my love of that article. When I read it, I was working for one of the most structurally incompetent companies I had ever experienced– a company which was on its way down in a spectacular ball of fire. We actually won the dubious honor of being the “worst performing IPO of 2000”, until were edged out by PETS.com.

    So your article (and writing) has always had a special place in my heart.

  58. Paul, if you think both are compromised you’re stuck in the Carter era.

    Detroit, for all it’s faults, gets styling and innovation right (whether in the exterior or interior.)

  59. Take a look at a new top-of-the-line Chevy Malibu. That is a sexy mid-sized sedan, in a world where “sexy” and “mid-sized sedan” are hardly ever mentioned in the same paragraph.

  60. I haven’t ever had a car loan, Matt. I’ve lived my life to minimize debt and risk and thanks to the government debasing the currency my savings is denominated in and increasing taxes to get the slim value that’s left, I’m going to get hit anyway. My wife got made at me when I spent our cash and some liquidated stock on a new car last year. I’ve told her now it was the best investment we made. I wish we’d gone on a 20-day cruise in the Orient with our stock portfolio as well.

  61. I only had one car loan. It was on my current car, the only car I ever bought new. My good credit got me a 0% six year loan. I paid it off in two years.

  62. I’ve never taken out a car loan. I could never afford a new car, so I’ve just bought used.

  63. “I’ve never taken out a car loan. I could never afford a new car, so I’ve just bought used.”

    Same here.

  64. “Since stuff like this always makes me feel even more like an outlier, am I the only here who has never taken out a car loan?”

    Count me in as well. Two used cars, cash on the barrel.

  65. I have never taken out a car loan and I never will.

  66. No car loan here and I drive a Lexus…of course it’s a ’96 with 208k miles (130k of which are mine).

    Bless that Toyota, it runs great.

  67. BDB, Malibu’s got decent lines, but it looks as though they copied Lexus.

    For the record, I think the new Cadillac CTS is a very sharp car. But after my experiences with two decades of cadillacs, I will force death-with-dignity on my mom if she ever buys another one. If Cadillac can’t figure out how to keep their cars from leaking or having computer failures in the 21st century when we put a goddamn man on the moon in the 20th, I’m done with GM products. For. Ever.

    I think Acura has some of the best looking cars on the road.

    Don’t get me wrong, BDB, all car mfg’s have clunkers and all have models that are hot. But model-for-model, the Europeans and Japanese have surpassed the Americans. America can be great again, but not with government intervention.

  68. Where’s my stimulus?

    It’s coming in the 2009 American Structured Securities Rescue Act for a Prudent Economy.

  69. So what’s the libertarian thing to do if this passes? Take the credit and deny the State the income, or refuse the credit in a principled stand agains all things bailout-y?

    Take the credit. Its your money, and the credit just keeps things that way.

    I’ve bought cars for cash and on credit. My wife’s a gearhead, so her cars tend to cost more than I have in cash.

    If I buy another 2.5 car, I will be very surprised. We have a 3 year old Nissan and a new Toyota, so I’m not expecting to need another car from any maker in quite some time.

  70. So I guess we can conclude from all of this that libertarians are, um, losers.

    Signed,

    Alan “drove a $2,000 lime-green Dodge Colt with a burned-out headlight for 12 years” Vanneman

  71. Is Instapundit also opposed to corporate interest being tax deductible or just consumer debt? I say, make all interest tax deductible or no interest tax deductible. The multiple standards between corporate, mortgage, student loan and regular consumer debt is idiotic.

  72. I don’t mind financing a car as long as it’s a low rate. It doesn’t make terrible sense if A) your previous car died beyond reasonable expense repair…check, B) you got a low rate on the new car…check, and C) plan to drive it for 20 years…check.

    2002 Mitsubishi Galant, 128k miles, A/C had issues last summer but other than that runs like a top. The three American cars I had from age 16-24 and my wife’s Saturn never made it past 108k miles.

  73. LMAO, jesus, are we now going to have to have a bubble in Car investing?

    I propose that we start the FALC (Federal Auto Loan Corporation) and we start encouraging auto loans for the nations poor, especially for Cadillac Escalades. Sub-prime auto loans for everyone!

  74. Hmm, I’m a week or so away from getting a hefty settlement check. Should we pay cash for the car my sweetie needs, or take out a loan to take advantage of this, even though we’ll have more than enough to pay cash?

    And in what rational universe would I even need to ask that question?

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