Consumers excited about spending less on a car loan for an electric car thanks to a new proposal that would increase tax subsidies may want to read the fine print – those benefits don't necessarily go to the consumer.
In President Barack Obama's budget proposal for 2013, released February 13, he called for replacing the current $7,500 electric car credit with a $10,000 advanced technology vehicle credit. While this credit would certainly apply to electric vehicles, the benefit is directed at the car dealer or the auto finance company, not the car buyer, according to a report from Cars.com.
The goal of the subsidies is to spur car dealers and financing companies into selling more of the fuel-efficient, technologically advanced vehicles. Whether or not those sellers choose to pass on the $10,000 savings to the consumer is entirely up to them, according to the report. The subsidy amount would taper off gradually over the next few years. The full amount would be available through 2016, and would decrease by $2,500 each year after that.
The original $7,500 electric car tax credit proved so popular after its introduction in 2009 that even purchasers of gas-guzzling Hummers and other large SUVs tried to cash in on it. A 2011 Treasury Department study found that more than $30 million in fraudulent claims were paid out between 2009 and 2011, according to DailyFinance.com.
