New government "CARS" Cash For Clunkers Program
07-27-2009, 09:13 AM
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Has anyone really spent much time looking at this new ?CARS? program (a/k/a Cash for Clunkers) in the U.S.? I have been reading about it, and it sounds like a total joke.
Here?s the deal: if you have an eligible vehicle (up to 25 yrs old and 18mpgs or worse) you can trade it in on a new vehicle that gets at least 22 mpgs, and the Government will give you up to a $4500 credit. That sounds like a great deal, right? $4500 may be enough incentive to get someone to upgrade from that 5 year old Hummer H2 that gets 12 mpgs to a hybrid Ford Escape or something.
Not so fast. Here?s the rub: because the car has to be scrapped (and not just parted out, but crushed or shredded) the only value you get for your trade-in is $4500 plus the scrap value. So, no one is trading in a 5-year old Hummer, because those vehicles still have book values of $18,000. In fact, I doubt anyone is trading in any 5-10 year old car to get $4500.
That means the only people using the program are people with 10-20 year old pick-ups and REAL clunkers. But then those people get penalized by the other part of the CARS program: it only applies to new cars purchased from dealers, not used cars, and it only applies to leases where the lease term is 5 years or more. First, these people are driving 20 year old cars for a reason. I doubt they have been sitting on a pile of cash ready to buy a brand new car, but were just $4500 away from doing so.
Second, the $4500 isn?t enough to justify buying a brand new car instead of a used one. Anyone with half a brain would say ?wait, if I trade in my truck for $1,000 on a 2-year old used Prius, I would save more than the $3500 that I would gain by using the CARS program.? The people who are used to driving 20 year old cars aren?t going to care whether their next car is brand new or 2 years old. Finally, for any of the wealthier people who maybe like to buy nice cars and keep them for 20 years and who may actually have that pile of cash sitting around, there is a $45,000 limit on the MSRP of the new car you can buy.
In the end, there simply is no financially rational reason under the CARS program for anyone to trade in anything on a brand new car in exchange for the government credit. It?s simply some ?feel good? legislation that is all about packaging, and which is a total boon to new car dealers and their lobbyists. What a joke.
Here?s the deal: if you have an eligible vehicle (up to 25 yrs old and 18mpgs or worse) you can trade it in on a new vehicle that gets at least 22 mpgs, and the Government will give you up to a $4500 credit. That sounds like a great deal, right? $4500 may be enough incentive to get someone to upgrade from that 5 year old Hummer H2 that gets 12 mpgs to a hybrid Ford Escape or something.
Not so fast. Here?s the rub: because the car has to be scrapped (and not just parted out, but crushed or shredded) the only value you get for your trade-in is $4500 plus the scrap value. So, no one is trading in a 5-year old Hummer, because those vehicles still have book values of $18,000. In fact, I doubt anyone is trading in any 5-10 year old car to get $4500.
That means the only people using the program are people with 10-20 year old pick-ups and REAL clunkers. But then those people get penalized by the other part of the CARS program: it only applies to new cars purchased from dealers, not used cars, and it only applies to leases where the lease term is 5 years or more. First, these people are driving 20 year old cars for a reason. I doubt they have been sitting on a pile of cash ready to buy a brand new car, but were just $4500 away from doing so.
Second, the $4500 isn?t enough to justify buying a brand new car instead of a used one. Anyone with half a brain would say ?wait, if I trade in my truck for $1,000 on a 2-year old used Prius, I would save more than the $3500 that I would gain by using the CARS program.? The people who are used to driving 20 year old cars aren?t going to care whether their next car is brand new or 2 years old. Finally, for any of the wealthier people who maybe like to buy nice cars and keep them for 20 years and who may actually have that pile of cash sitting around, there is a $45,000 limit on the MSRP of the new car you can buy.
In the end, there simply is no financially rational reason under the CARS program for anyone to trade in anything on a brand new car in exchange for the government credit. It?s simply some ?feel good? legislation that is all about packaging, and which is a total boon to new car dealers and their lobbyists. What a joke.
07-27-2009, 09:29 AM
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Originally Posted by 1esquire' post='955593' date='Jul 27 2009, 01:13 PM
Has anyone really spent much time looking at this new ?CARS? program (a/k/a Cash for Clunkers) in the U.S.? I have been reading about it, and it sounds like a total joke.
Here?s the deal: if you have an eligible vehicle (up to 25 yrs old and 18mpgs or worse) you can trade it in on a new vehicle that gets at least 22 mpgs, and the Government will give you up to a $4500 credit. That sounds like a great deal, right? $4500 may be enough incentive to get someone to upgrade from that 5 year old Hummer H2 that gets 12 mpgs to a hybrid Ford Escape or something.
Not so fast. Here?s the rub: because the car has to be scrapped (and not just parted out, but crushed or shredded) the only value you get for your trade-in is $4500 plus the scrap value. So, no one is trading in a 5-year old Hummer, because those vehicles still have book values of $18,000. In fact, I doubt anyone is trading in any 5-10 year old car to get $4500.
That means the only people using the program are people with 10-20 year old pick-ups and REAL clunkers. But then those people get penalized by the other part of the CARS program: it only applies to new cars purchased from dealers, not used cars, and it only applies to leases where the lease term is 5 years or more. First, these people are driving 20 year old cars for a reason. I doubt they have been sitting on a pile of cash ready to buy a brand new car, but were just $4500 away from doing so.
Second, the $4500 isn?t enough to justify buying a brand new car instead of a used one. Anyone with half a brain would say ?wait, if I trade in my truck for $1,000 on a 2-year old used Prius, I would save more than the $3500 that I would gain by using the CARS program.? The people who are used to driving 20 year old cars aren?t going to care whether their next car is brand new or 2 years old. Finally, for any of the wealthier people who maybe like to buy nice cars and keep them for 20 years and who may actually have that pile of cash sitting around, there is a $45,000 limit on the MSRP of the new car you can buy.
In the end, there simply is no financially rational reason under the CARS program for anyone to trade in anything on a brand new car in exchange for the government credit. It?s simply some ?feel good? legislation that is all about packaging, and which is a total boon to new car dealers and their lobbyists. What a joke.
Here?s the deal: if you have an eligible vehicle (up to 25 yrs old and 18mpgs or worse) you can trade it in on a new vehicle that gets at least 22 mpgs, and the Government will give you up to a $4500 credit. That sounds like a great deal, right? $4500 may be enough incentive to get someone to upgrade from that 5 year old Hummer H2 that gets 12 mpgs to a hybrid Ford Escape or something.
Not so fast. Here?s the rub: because the car has to be scrapped (and not just parted out, but crushed or shredded) the only value you get for your trade-in is $4500 plus the scrap value. So, no one is trading in a 5-year old Hummer, because those vehicles still have book values of $18,000. In fact, I doubt anyone is trading in any 5-10 year old car to get $4500.
That means the only people using the program are people with 10-20 year old pick-ups and REAL clunkers. But then those people get penalized by the other part of the CARS program: it only applies to new cars purchased from dealers, not used cars, and it only applies to leases where the lease term is 5 years or more. First, these people are driving 20 year old cars for a reason. I doubt they have been sitting on a pile of cash ready to buy a brand new car, but were just $4500 away from doing so.
Second, the $4500 isn?t enough to justify buying a brand new car instead of a used one. Anyone with half a brain would say ?wait, if I trade in my truck for $1,000 on a 2-year old used Prius, I would save more than the $3500 that I would gain by using the CARS program.? The people who are used to driving 20 year old cars aren?t going to care whether their next car is brand new or 2 years old. Finally, for any of the wealthier people who maybe like to buy nice cars and keep them for 20 years and who may actually have that pile of cash sitting around, there is a $45,000 limit on the MSRP of the new car you can buy.
In the end, there simply is no financially rational reason under the CARS program for anyone to trade in anything on a brand new car in exchange for the government credit. It?s simply some ?feel good? legislation that is all about packaging, and which is a total boon to new car dealers and their lobbyists. What a joke.
07-27-2009, 10:43 AM
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It depends on your situation. My younger brother had an old Honda Passport (basically a re-badged Isuzu) and just bought a 2009 Toyota Camry using CARS. Because of the mileage difference, he was qualified for a full amount ($4500).
Most of us won't benefit from CARS because of the mileages and price limit.
Most of us won't benefit from CARS because of the mileages and price limit.
07-27-2009, 10:46 AM
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Originally Posted by 1esquire' post='955649' date='Jul 27 2009, 02:23 PM
It has to have been titled in your name and insured for at least 12 months to qualify.
07-27-2009, 05:38 PM
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Originally Posted by craigm1841' post='955905' date='Jul 27 2009, 07:07 PM
another excellent program brought to you by none other then... *cough*... ah, i forgot what i was saying.
give me a break
07-27-2009, 06:50 PM
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Originally Posted by zen68' post='955668' date='Jul 27 2009, 01:43 PM
It depends on your situation. My younger brother had an old Honda Passport (basically a re-badged Isuzu) and just bought a 2009 Toyota Camry using CARS. Because of the mileage difference, he was qualified for a full amount ($4500).
Most of us won't benefit from CARS because of the mileages and price limit.
Most of us won't benefit from CARS because of the mileages and price limit.
07-27-2009, 07:01 PM
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Originally Posted by DRANGED' post='956122' date='Jul 27 2009, 10:50 PM
This program hasn't even started yet. How did he use the program?
dealerships are advertising this left and right.