It's a good time to buy a car

DETROIT — General Motors Corp. still is burning billions in cash, reporting a $9.6 billion loss for the fourth-quarter.

Domestic and foreign automakers alike are suffering, reporting industry sales at dismal levels not seen in 26 years.

GM and Chrysler have received financial help from the government, and they're asking for more. But the only way car companies will be able to turn their fortunes around is by getting consumers to return to dealerships and purchase new cars.

What are the government, automakers and dealers doing to try to nudge weary customers back to showrooms?

Here are some questions and answers about buying a car during this tumultuous time for the auto industry.

Q: Is now a good time to buy a car? Can I get good deal?

A: Yes and Yes. Dealers are anxious to make sales to bring in cash and move inventory off their lots. Many automakers are offering employee pricing, which in some cases shaves as much as 10 percent off the price. There also are additional incentives and rebates buyers can take advantage of, varying from manufacturer to manufacturer and dealer to dealer.

Q: Is there aid in the stimulus bill if I decide to buy a new car? And would I have to purchase an American-made vehicle?

A: The stimulus bill gives consumers a state sales tax and excise tax deduction on new cars purchased before the end of 2009. This benefit does not apply to single filers making more than $150,000 or joint filers making more than $250,000.

A car buyer's savings will vary depending on financing terms, state and local sales tax rates and the buyer's income. All car makes and models are eligible for the savings.

Q: Are there additional tax rebates for hybrid car purchases?

A: Thanks to the stimulus, you can get a tax credit of up to $7,500 if you buy a plug-in hybrid vehicle or get some sort of electric vehicle before 2012.

Q: I have enough money to buy a car; will I be able to get financing?

A: Even those with the most handsome credit scores might run into some difficulties.

"We have more customers in our showrooms than we can arrange credit for," said Mike Jackson, chief executive officer of AutoNation Inc., the country's largest chain of auto retailers. "We have prime customers who have excellent credit scores, good jobs and good down payments and can't get credit."

The Fort Lauderdale, Fla.- based company operates about 245 used and new car dealerships across 16 states, representing both U.S. and foreign automakers.

Jackson said banks have tightened the reins on the amount of money they're willing to lend. When credit flowed freely, dealers would have to contact two or three banks to secure financing for customers. "Today we have to approach six, seven or eight banks," he said.

It's unclear whether millions of dollars given to the financing arms of GM and Chrysler have helped make financing more readily available.

Credit unions are becoming a good option for consumers. Last month, the national credit union group CUcorp expanded its "Invest in America" program, which is expected to give 90 million members of nearly 8,000 credit unions potential access to low-interest loans for GM and Chrysler vehicles.

Q: Can I lease a car?

A: It depends on the brand. Leasing is virtually nonexistent now, Jackson said, with the exclusion of some foreign and luxury models.

Q: When will the auto market get better?

A: No one has a crystal ball. But automakers hope there will be a turnaround during the second half of the year, and that 2010 will be better.

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