That's right, a car can be thought of as a financial investment. In fact considering that most new cars start depreciating the minute you leave the lot, and could lose up to twenty percent of their value within the first year, buying a car could be seen as financial folly.
What you may not know is that hybrid cars can give you a financial advantage in terms of federal tax credits. Hybrid-electric vehicles purchased after 2010 could be eligible for up to $7,500 in Federal tax credits. Purchasing a hybrid vehicle could make you eligible for tax credits and other financial incentives on the state level as well. If you use the vehicle for business purposes, you can deduct the insurance, maintenance, what little you spend on gas, and even the car payment as a business expense on your taxes.
The Cost of Hybrid Cars
One of the big issues with hybrid vehicles is that, although they offer financial benefits, they can be fairly expensive to buy. If you don’t have an excellent credit score, it could be very difficult to even secure the financing you need to purchase one of these vehicles. Luckily there are specialty finance companies, like Consumer Portfolio Services, that can make it easier for people with less than stellar credit to invest in a hybrid vehicle.
What is Specialty Finance Company
Specialty finance companies help consumers with difficult financing issues by purchasing and servicing retail automobile contracts from franchised and independent automobile dealers. They then offer indirect financing to the customer, through the dealer. Specialty loans, like the ones available through Consumer Portfolio Services, are ideal for individuals with past credit issues, or a limited credit history, who might not be able to obtain financing through traditional means.
Getting Specialty Financing
The process for getting specialty financing is similar to the process for getting a traditional car loan. Often times the dealer will automatically try several finance options based on your preliminary credit and income report, and one of those will be a specialty finance company. However, if you are aware of your credit limitations, you can also notify the dealer in advance and they can start working toward getting you the specialty financing you need.
Once the dealer determines that you qualify for specialty financing, he can tell you the amount for which you have been approved so you can purchase the hybrid vehicle of your choice.
Things to Consider
Thanks to the potential tax breaks and financial incentives, purchasing a hybrid vehicle could be a smart investment. To get the most out of your investment, here are some things to consider:
· Avoid buying more care than you need. If you don’t do a lot of hauling or off-roading, a sedan will probably serve you better than an SUV. You’ll save money on the initial cost of the car, you could have better insurance rates, you’ll get better gas mileage, and the sedan could have a slower rate of depreciation than an SUV.
· Avoid purchasing extras. While a factory-installed sun-roof, a high-end stereo, or a spoiler, but these can also drastically increase the cost of the vehicle. Additionally, the price you pay for factory-installed items is often more than getting it done at a reliable after-market vendor.
· Put a little money down. Even if you are approved for the full price of the vehicle, it’s a good idea to pay a portion of the cost up front. That will lower your monthly payment and your interest.
· Pay a little more each month. Making a double payment each month ensures that you pay off more of the principle, and less in interest. You will also pay off the loan faster, which means you will not reap the financial rewards associated with owning a hybrid vehicle; you will also own the car outright before it has fully depreciated.
