What is Cash for Clunkers?
I’ve recently read about a crazy new government stimulus program that is offering good old folks like you and me something like $4500 for any old, piece of junk car, if we buy a new one. Now I know that there are some rules and regulations about the gas mileage of the old and new vehicles (new one must get better mileage and such) but does anyone understand this program?
It seems to me like if you drive an old clunker, you probably put pretty little value on the “looks” of your vehicle. And I’m guessing that you probably HATE the thought of spending a years salary on buying a new one when your old one is serving you just fine and is allowing you to keep putting food on the table.
I could be missing something, but WHO CAN AFFORD a new car at today’s inflated prices, without job security, with the value of your home in the tanks, with taxes going up, and with your investments a fraction of their former selves. Not to mention that wages are decreasing across the country and millions of people who do have jobs are having to take paycuts and are under employed.
Is it stupid to think that a better plan may have been to incentivize WEALTHY AMERICANS to start buying more and newer cars. They actually have the cash to do it…and they can give their old Cadillacs to their grand kids or something like that. Give the rich people a tax break for once and see how they open up their pocketbooks and jump start consumer spending.
Trickle down baby, trickle down!
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July 17th, 2009 at 10:31 am
Hi TAM..
Here’s the link - CARS.gov
It looks like the rebate was created as a way to reduce dependence on foreign oil as opposed to being created as a stimulus package, but who knows what “really’ happens behind the scenes.
Also, it looks like there aren’t any qualifications about income level. So, this rebate can benefit anyone regardless of whether they’re wealthy or poor.
Heck, if anyone’s looking to buy a new car it might even pay off to buy a $500.00 - $1000.00 clunker from someone just to use as a trade-in for the rebate.
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used tires Reply:
July 17th, 2009 at 1:00 pm
Mike that sounds like a great idea, but I think there is a rule that prevents people from doing that, something about having the car registered and insured by the same owner for a full year.
Till then,
Jean
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Mike Reply:
July 20th, 2009 at 12:00 am
Thanks Jean.. I guess I didn’t read the rules close enough. Too bad!
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July 17th, 2009 at 11:32 pm
Actually, it makes some kind of sense, if you can afford even small payments. If you were to buy a new car that costs less than $10,000, you could end up getting one, with the trade in, for around $5,500 or so, with better fuel economy and potentially a 10 year warranty. Much better than trading in a car and only getting $1,000 for it, which they might have thought of as a stretch to begin with.
Thing is, if you’re rich, are you really driving around in a clunker?
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used tires Reply:
July 18th, 2009 at 5:08 pm
Well that’s the thing though Mitch… if you are driving a Clunker, doesn’t that mean you are likely not in a position to buy a new car? I bet not alot of people have the mindset of that you just laid out, but I could be very wrong. Personally though… anyone with a clunker that qualifies for the rebate should have some serious thought about getting on top of this offer. It will pay off big time in the long run, in many more ways than just the money aspect of it.
Till then,
Jean
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Mitch Reply:
July 18th, 2009 at 5:18 pm
Not necessarily, Jean, though I know where you’re coming from. I had a clunker many years ago myself. I had to buy a quart of oil a week for it, which was around $20 a month. I was getting terrible gas mileage, and even with few miles, I had to fill up every 5 days or so, and it was a big car. One of the windows didn’t fully close, and I live in an area with lots of cold.
Now, though I couldn’t have gotten a car for the same size, if I had an offer like this, I would go to the Hyundai place, buy one of the cars they advertise for around $7,000, take my $4,500 rebate, and finance it for 5 years. The payments monthly would be around $65, if that, but I’d have a brand new car that got nearly 30 miles a gallon with a 10 year warranty. With the price of oil and gas in today’s world, I would pretty much come out even.
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The Almost Millionaire Reply:
July 20th, 2009 at 12:18 am
Mitch,
You lay out a great case here for why the program may really help our economy and also those who need to upgrade their vehicle. Thanks for you input, as always!
Best,
B
used tires Reply:
August 1st, 2009 at 6:40 am
Well Mitch, it looks like you are absolutely right, as far as I’ve read.. the program is having great success… too much success in fact for them hehe. So it looks like there have been alot of smart people out there taking advantage of this great rebate offer! Now let’s just hope that they are able to deal with the car salesman, to reduce the price even more! =D
Till then,
Jean
July 18th, 2009 at 9:07 am
Government will play all these tricks to tempt the people. However emissions and gas mileage is a big big issues.
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July 20th, 2009 at 12:19 am
@Mike,
I was thinking the same thing as you…buy a $500 car and get the rebate. Too bad indeed, I love taking advantage of great deals like I thought that was! Oh well, maybe in the next stimilus program.
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July 20th, 2009 at 1:51 pm
I’ll be driving my beat up old Dodge 4×4 (with nice stereo system haha) until the wheels fall off!
I HATE a car payment!
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July 20th, 2009 at 6:46 pm
The government’s definition of a clunker is a vehicle that gets combined mileage of 18mpg or less according to their website. Most cars don’t qualify. The program is really designed to get pickups and SUVs off the road.
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July 31st, 2009 at 5:56 pm
[...] first learned about this program from my buddy Brandon’s blog The Almost Millionaire, and commented on it back then. To me, this seemed like a good program that, if handled properly, [...]
August 1st, 2009 at 1:04 pm
Thanks Jean; I do have my moments here and there.
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August 4th, 2009 at 2:22 pm
Karen said- “…The program is really designed to get pickups and SUVs off the road.”
So they say… I think the mileage requirement is just PR to mask their true intentions- to cover their behinds in their investments in American automakers.
I’m not a fan of this at all. Just more deficit spending that’s going to be extremely painful to pay back.
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The Almost Millionaire Reply:
August 5th, 2009 at 12:59 am
Blake,
Very interesting take, and I had not considered that angle…real as it possibly is. Thanks for chiming in brother! Hope all is going well…things are very busy here in Mid Michigan believe it or not!!!
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August 4th, 2009 at 11:40 pm
I just got a new car a week ago, too bad I couldn’t use the cash for clunkers.
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October 2nd, 2009 at 11:13 am
I love the term cash for clunkers.
We do a similar scheme in the UK where if you have had your car for a certain period of time and it is over so many years old you get a few ££thousands knocked off the price of a brand new vehicle.
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November 20th, 2009 at 4:07 pm
Catchy title for the govt initiative, pity not so much time was put into working out the actual scheme effectively.
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