Last Updated: June 15, 2009
President Barack Obama wants Americans to buy new cars. In fact, the Obama Administration recently announced a tax break for the purchase of new motor vehicles available in states that do not have a state sales tax.
Under the American Recovery and Reinvestment Act of 2009, taxpayers who buy a new motor vehicle this year are entitled to deduct state or local sales or excise taxes paid on the purchase, according to a press release issued by the Internal Revenue Service (IRS) and Treasury Department. The IRS and Treasury have determined that purchases made in states without a sales tax — such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon — can also qualify for the deduction. Learn more about the tax break.
However, while President Obama strives to jump start new-car sales, an interesting trend is underway. Americans, it appears, are buying used cars in droves and prices are on the rise. According to CNW Research, Americans bought nearly 4 million used cars in May. That's 23 percent over the previous month. Meanwhile, sales of new cars — despite incentives and cash-back offers, fell roughly 34 percent over the same time period. In addition, CNW Research reported in June that the average transaction price for a used car hit $10,156 in April, the highest price since 2005.
If you are among those Americans who would rather purchase used or pre-owned vehicles, consider Kelley Blue Book's checklist.
Step 1: Find Out How Much You Can Afford
Step 2: What's the Right Car for You?
Step 3: Find Your Car's Value
Step 4: Contact and Communicate with the Seller
Step 5: Get Both a History and a Safety Report on the Car
Step 6: Conduct a Thorough Walk-Around
Step 7: Conduct a Thorough Test Drive
Step 8: Go the Extra Mile to Assure Quality
Step 9: Negotiate Your Best Private Party Price
Step 10: Negotiate Your Best Dealer Retail Price