Is the “cash for clunkers” program suspended or not?
There’s been a lot of press lately about the ‘œcash for clunkers’ program, formally known as the Car Allowance Rebate System, a $1 billion government program that helps consumers purchase a more environmentally-friendly vehicle from a participating dealer when they trade in a less fuel-efficient car or truck. Consumers receive a discount up to $4,500 from the dealership when they make the trade.
The program officially started on July 1, 2009, but claims didn’t get processed until July 24, 2009’¦ hence the buzz in the media.
Yesterday, The USA Today reported the government was putting the brakes on the program:
The government suspended the explosively popular ‘œcash for clunkers’ program, fearing it would go broke before it could pay what it still owes dealers for a huge backlog of sales, according to congressional offices and a dealer group.
Suspension of the program was confirmed by Bailey Wood, legislative director for the National Automobile Dealers Association (NADA), which had been called Thursday night by the National Highway Traffic Safety Administration, which administers the program. Rep. Candice Miller, R-Mich., confirmed as well, saying she had been told by congressional leaders.
However, the article continues on and reports that Robert Gibbs, the White House spokesman said that the administration was ‘œevaluating all options’ and the program was not yet suspended. This has caused a bit of confusion about the program’s status; leaving consumers in the dark about whether they can trade in their clunkers as of today.
That said, if the program runs through its anticipated end date of Nov 1, 2009, Joe LaMuraglia, the founder of gaywheels.com, has this advice:
From a consumer’s perspective, go to Cars.gov to see if your car qualifies and be very careful when working with the dealer. There are already some reports that dealers are raising prices to take advantage of the program. Do your research on sites like gaywheels.com to get pricing first, then negotiate a price and then say that you want to take part in the ‘œcash for clunkers’ program.
And while the program needs to be more inclusive and include a broader range of vehicles and perhaps even older vehicles, LaMuraglia praised the government’s first attempt as a win-win for the economy:
Dealers get guaranteed money from the government and eligible consumers get a great discount on a new car. It is a great deal if your car is worth less than the amount you get on the program.
Wondering if your clunker qualifies? Click here to see if you can take advantage of this program before it runs out of gas.
Has anyone made a trade? Considering it? We’d love to read about your personal experience in the comments section below.
Image credit: Reprinted with permission – 2009 Copyright Pasch Consulting Group, Inc.
Read this article: The Real Reason for the “Cash for Clunkers” Suspension. The ex car salesman blog shares exactly why they stopped the program. Even reports that some sales managers are calling asking for the money back because they were denied the rebate when the final paperwork was submitted but their car was already ruined by dumping a solution in the engine. They now have no car. Scary. See: http://tinyurl.com/ml9sdo
what has not been said about the cash for clunker program is the car dealers run your credit.
The advice about doing research before hitting the car lot is really important. You should definitely print out the prices off of the factory website and take them with you to the dealership, then demand to see the invoice if the sticker price is different than what your internet research shows.
While the C4C program is a nice idea a Billion dollars and the number of cars it removes is NOTHING!!!
Sure it removes 250,000 cars…but divide it out.
There are 23,000 New Car Dealers in the US so each of them can take…TA! DA!!…11 C4C cars.
Most car dealers normally sell that many before noon on any particular day of the week let alone the really large dealers that will sell upwards of 75-100 a day.
And if anyone thinks this plan is to help just the auto industry remember that you only get $4500 off a $25,000 car…so you get to make Payments to the Bank for the next 4 or 5 years.
An old rule of thumb my dad used to apply at his dealership was take the interest rate and multiply it by the number of years of the loan (most car loans are simple interest not compound) then mulitply that by the amound financed and divide by the number of months of the loan and you get a rough idea of what the payment will be.
Example: $25,000 car minus $4500 C4C leaves you owing the bank $20,500.
Interest rate is 8% and your financing it for 5 years (60 months).
.08 x 5 equals .40
$20,500 x 40% equals $8,200. (and NOT tax deductable interest either)
Add to amount financeed…$20,500 + $8,200 means you finance $28,700.
Divide by length of loan in months $28,700 / 60 equals $478.33 a month payment.
I don’t know about anyone else but paying $8,200 in interest let alone $20,500 on the cost of a new car after the C4C rebate with a payback of god knows how long on the gas savings isn’t smart thinking.
Actually lets do a payback….trade in 15 mpg vehicle for 25 mpg vehicle….40% increase in fuel economy. Lets say I drive 20,000 miles a year..1,333 gallons used at 15 mpg and 800 gallons used at 25 mpg.
533 gallons saved at lets say $3 a gallon you pay an extra $1,599 a year in gas.
$28,700 / $1,599 means it takes you 17.94 years to get back your money….provided of course you still have the vehicle at the end of 18 years.