Feds May Offer Bounty On Inefficient Used Cars

Last week, Toyota introduced its Certified Used Hybrid program, the first certified program for used hybrid vehicles. Vehicles with the certification receive a three-month, 3,000-mile comprehensive warranty, a seven-year, 100,000 mile powertrain warranty and roadside assistance. The vehicle also goes through a 174-point inspection, 14 elements of which are specific to the company's hybrid models.

Toyota already warrants its hybrid batteries for eight years or 100,000 miles. The certified used program does not extend the warranty on the battery, however. The program was initiated in part because the company is now seeing an increase in used hybrid trade-ins and wants to capitalize on the demand for the vehicles.

Used cars are getting more attention. Earlier this month, Senator Diane Feinstein introduced a new piece of legislation aimed at getting drivers of older vehicles to trade in cars and trucks that are older and less fuel-efficient. The legislation, known as the Accelerated Retirement of Inefficient Vehicles Act (ARIVA) would provide vouchers for buyers who turn in an older vehicle and replace it with a 2004 or later model vehicle that achieves a fuel economy at least 25 percent better than other vehicles in its class.

The vouchers would knock $2,500 to $4,500 off the cost of the car and the replacement vehicle must be priced less than $45,000. Most hybrid vehicles - used or new - would qualify for the voucher credits. The plan also requires that older vehicles turned in under the program be crushed to prevent them from being put back into service.

A second bill, introduced by Senator Barbara Mikulski of Maryland would permit taxpayers to deduct the cost of car loan interest from their income taxes. The deduction would be limited to the first $49,500 and would be available only to individuals making less than $150,000 or joint filers making less than $250,000.