Co-Signing loan for daughter with a $4K EV tax credit on Used Mustang Mach-E? Dealer says you cant do it!

[Wrestling Scholar]

My daughter is just out of college with a new gig and is in the sweet spot of income under $75K to obtain the Used EV Credit. She technically meets all the guidelines and checked boxes to get the credit. I have a 2024 Mach-E and she likes it. So we we negotiated a deal to get a 2022 Mach E Gt with a dealer. I negotiated a deal with her to purchase Mach-E under $25K and to obtain a tax credit for $4k. My daughter has very little credit history, but has a good credit score at 705 as shes just out of school. In attempt get her a better interest rate and insure the loan would go through. I filled out paperwork to cosign on the loan. But the management at the dealership indicated that a parent co-signing on loan on EV used credit would compromise the tax credit since my income was over $75K. This option was nullified, even though the contract and title would be in her name. Unfortunately, we were at dealership after hours and banks were closed. They came back and said that she wasn't auto approved and needed to talk to finance person the next day based on her limited credit. So we couldnt get car last night which sucks because we drove a long ways to get this deal done. Probably can get loan today, but banks need to talk to finance at dealer. And i think rate will be 3 or 4% higher then if i co-signed. Also, the drive sucks.

Was the dealer correct in not allowing co-signing by parent on purchase of car with EV credit? Its silly as she could re-finance (pending early cancel fees) and have me co-sign on a new loan with a better rate right after pruchaase

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[geeklifer]

That doesn't really sound right, but maybe the rules are different now. We bought 2 EVs in 2023: a new MME and a used EV. We were able to get credit for both, with me owning the MME and the wife owning the other one, although the cars were in both of our names.

 

[ack154]

Generally co-signing a loan is more than a lot of people think it is. You're not just saying that you'll pay if that person doesn't. You're basically jointly applying for a loan - at which point they take all income into consideration. I mean, how else are they going to determine if you're able to pay it back if she doesn't?

But I think the question would really be, is the tax credit based on the financing information for the purchase or the household tax situation with the IRS (that you would presumably not be a part of)? And that information would have to come from wherever the tax credit is coming from - not necessarily the dealer.

At least, that's how I interpret it. And it's a bit different from when I had to file my taxes last year to get the credit for my 2023 purchase.

 

[A-A-Ron]

Could you possibly apply for financing at your local bank/CU and go in with a pre-approval for her to buy the car. I'm sure there are plenty of people trying to game the tax credit

 

[DennisD]

My daughter is just out of college with a new gig and is in the sweet spot of income under $75K to obtain the Used EV Credit. She technically meets all the guidelines and checked boxes to get the credit. I have a 2024 Mach-E and she likes it. So we we negotiated a deal to get a 2022 Mach E Gt with a dealer. I negotiated a deal with her to purchase Mach-E under $25K and to obtain a tax credit for $4k. My daughter has very little credit history, but has a good credit score at 705 as shes just out of school. In attempt get her a better interest rate and insure the loan would go through. I filled out paperwork to cosign on the loan. But the management at the dealership indicated that a parent co-signing on loan on EV used credit would compromise the tax credit since my income was over $75K. This option was nullified, even though the contract and title would be in her name. Unfortunately, we were at dealership after hours and banks were closed. They came back and said that she wasn't auto approved and needed to talk to finance person the next day based on her limited credit. So we couldnt get car last night which sucks because we drove a long ways to get this deal done. Probably can get loan today, but banks need to talk to finance at dealer. And i think rate will be 3 or 4% higher then if i co-signed. Also, the drive sucks.

Was the dealer correct in not allowing co-signing by parent on purchase of car with EV credit? Its silly as she could re-finance (pending early cancel fees) and have me co-sign on a new loan with a better rate right after pruchaase

Just simply have her borrow the money from you and she pays cash to the Dealership and (because you were willing to be a co-signer) have her pay you back with the interest that you would have received from the Bank.

Win-Win

 

[Wrestling Scholar]

Exactly, Im securing a HELOC at 7.15%. Going to put an Amortization table together and have her pay me back. The dealer used car rate, going to be around 12%. 5 % on a $20K loan goes a long ways for just out of school. The hassle is the dealer was 150 miles away, so got to make a road trip again. Im waiting to tell dealer were going to pay in cash. Based on the way this dealer negotiated, and the fact they get kickbacks from loans they sell, I hope they dont back out.

 

[Wrestling Scholar]

Could you possibly apply for financing at your local bank/CU and go in with a pre-approval for her to buy the car. I'm sure there are plenty of people trying to game the tax credit

Generally co-signing a loan is more than a lot of people think it is. You're not just saying that you'll pay if that person doesn't. You're basically jointly applying for a loan - at which point they take all income into consideration. I mean, how else are they going to determine if you're able to pay it back if she doesn't?

But I think the question would really be, is the tax credit based on the financing information for the purchase or the household tax situation with the IRS (that you would presumably not be a part of)? And that information would have to come from wherever the tax credit is coming from - not necessarily the dealer.

At least, that's how I interpret it. And it's a bit different from when I had to file my taxes last year to get the credit for my 2023 purchase.

I read the tax regulation and dont see anything about how the car is financed. Its just important whose buying it and is on is on the title. But the dealoer has done these before, and i suppose they're being conservative as they're paying the credit to buyer and get reimbursed by IRS. They dont want a $4k mistake on their hands.

 

[MacherAWD]

I read the tax regulation and dont see anything about how the car is financed. Its just important whose buying it and is on is on the title. But the dealoer has done these before, and i suppose they're being conservative as they're paying the credit to buyer and get reimbursed by IRS. They dont want a $4k mistake on their hands.

Can't you also not take the $4k at time of purchase and get it when you do your taxes? Granted you are now waiting a year to get the $4k.

 

[Wrestling Scholar]

Use the dealership loan and $4K tax credit, then refinance it through a credit union with you as co-signer.

That was the plan, but most lenders have an early cancellation fee. I mentioned that to dealer, and they said minimally 3 months. They pay the dealer up front for these loans, and will lose money when get paid off early.

 

[MacherAWD]

That was the plan, but most lenders have an early cancellation fee. I mentioned that to dealer, and they said minimally 3 months. They pay the dealer up front for these loans, and will lose money when get paid off early.

When I bought a used Bolt the dealer "asked me nicely" to not pay off the car before 3 months because of this, extra kick-backs they get. There was no consumer side payment penalty though. That dealer refused to submit my IRS form for the credit so I just did it myself and then paid the loan off immediately and told them why, you dont scratch my back, I dont scratch yours.

 

[ipca204]

That doesn't really sound right, but maybe the rules are different now. We bought 2 EVs in 2023: a new MME and a used EV. We were able to get credit for both, with me owning the MME and the wife owning the other one, although the cars were in both of our names.

what tax credit did you get for buying a NEW mach-e in IL????

 

[geeklifer]

what tax credit did you get for buying a NEW mach-e in IL????

This was for the 2023 tax year, when we still got a partial federal credit.

 

[ryannix123]

My daughter is just out of college with a new gig and is in the sweet spot of income under $75K to obtain the Used EV Credit. She technically meets all the guidelines and checked boxes to get the credit. I have a 2024 Mach-E and she likes it. So we we negotiated a deal to get a 2022 Mach E Gt with a dealer. I negotiated a deal with her to purchase Mach-E under $25K and to obtain a tax credit for $4k. My daughter has very little credit history, but has a good credit score at 705 as shes just out of school. In attempt get her a better interest rate and insure the loan would go through. I filled out paperwork to cosign on the loan. But the management at the dealership indicated that a parent co-signing on loan on EV used credit would compromise the tax credit since my income was over $75K. This option was nullified, even though the contract and title would be in her name. Unfortunately, we were at dealership after hours and banks were closed. They came back and said that she wasn't auto approved and needed to talk to finance person the next day based on her limited credit. So we couldnt get car last night which sucks because we drove a long ways to get this deal done. Probably can get loan today, but banks need to talk to finance at dealer. And i think rate will be 3 or 4% higher then if i co-signed. Also, the drive sucks.

Was the dealer correct in not allowing co-signing by parent on purchase of car with EV credit? Its silly as she could re-finance (pending early cancel fees) and have me co-sign on a new loan with a better rate right after pruchaase

It's probably better that you buy it outright and then refinance it with her name later. I don't think she makes enough for the $4500 tax credit to be effective at tax time. If I understand the credit correctly, the credit goes against what you owe the Feds. Therefore, you probably stand to benefit more financially than your daughter does.

 

[Booradley]

I just bought a new 2024 premium on Jan 9 and was told there is no Fed tax credit. Ford gave $2500. The car apparently didn’t qualify. Was I duped? This was before the new administration.

 

[generaltso]

I just bought a new 2024 premium on Jan 9 and was told there is no Fed tax credit. Ford gave $2500. The car apparently didn’t qualify. Was I duped? This was before the new administration.

This thread is about the used car credit. You bought new.

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