It seems that the Feds have decided to give you a little bit of cash back when you decide to buy a new car.  The reason is of course the slumping car market.  Since sales have declined so much for not only the Big Three auto makers, but really for all makers globally, our government has decided to give the people a little incentive to buy.  That incentive will be a tax break on interest from new car loans.  This is of course stealing from Peter to pay Paul since someone has to pay that interest, but best not to think about it.  According to http://www.freep.com/ the loan grace period will last around a year but will not apply if you are making too much money:

“Mikulski’s proposal would grant a tax credit for vehicles bought between Nov. 12 of last year and Dec. 31 of this year. The tax break would only go to families making less than $250,000 a year, and would only apply to interest on loans up to $49,500.

“Everyone wants to save auto manufacturers, but no matter how much government aid we give to the Big Three auto makers, they can’t survive if consumers don’t start buying cars,” Mikulski said.”

Will the interest plan help?  Hard to say, but it is ironic to note that this isn’t new.  We actually already gave Chrysler 1.5 billion so they could give out no interest loans.  So, at least for Chrysler, this is really a meaningless bit of legislation.  If however you are in the market for a new car, pick one up now…it’s on us!
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