Cash For Clunkers And Its Ups And Downs
It was just announced that the House has approved another $2 billion dollars to keep its “Cash For Clunkers” program going.
I 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, could offer win-win benefits for both the auto industry and people who owned older cars that they really needed to update.
The way the program works is that people can present their old car, which has to be getting less than 18 miles a gallon, and if they purchase a new car they could qualify for up to $4,500 towards that purchase. Many worried that someone might come up with ways of keeping people from qualifying for these benefits. Instead, it seems it had the opposite effect.
In just over a week, more than 20,000 claims for this benefit were made; I’d have never seen that one coming. The thing is, the program was funded for “only” $1 billion dollars, which meant if more claims came in, which obviously was going to happen, that the program had already run out of money.
Why was this a great benefit? Think of it in terms like this. If you have an old car, it’s probably burning a lot of oil and getting terrible gas mileage. If you bought the right type of new car, you could not only get something that might get you close to 30 miles a gallon, but you could end up with a ‘push’ as far as your expenses go versus a monthly payment. That, plus frankly, getting a nice, new car has to be a rush when compared to what you’re driving, unless it’s being kept in mint condition and being shown at car shows; that’s probably not the case if you’re even entertaining the idea of trading your car in.
This is definitely a great deal. If you want a hint, if it were me, I’d probably be looking at a Hyundai of some kind. They have smaller cars, not midget cars, that often go for around $7,500, with a 10 year warranty. Think about getting $4,500 towards that, then financing your car for 5 years or so. Monthly payments would cost less than filling your car up and buying cans of oil within 3 weeks; you’d get a free week of money to put in your pocket.
See, not everything the government has come up with has failed; let’s be optimistic about some other things that might yet work out.