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Cash For Clunkers Program

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Beater Used CarUpdate: The bill has passed both chambers of Congress, getting through the Senate on Thursday, and President Obama is expected to sign it into law soon.

The Cash for Clunkers program would provide a voucher worth $3,500 to $4,500 to consumers trading their vehicles in. The vehicles have to be in running condition and get less than 18 miles a gallon in fuel efficiency. The value of the voucher is determined by this schedule:

  • For passenger cars, the new car has to get at least 22 MPG (EPA combined MPG). You get the $3500 voucher if you get an improvement of at least 4 MPG, $4500 for at least 10 MPG.
  • For light duty trucks, SUVs, and minivans, the new vehicle has to get at least 18 MPG. You get $3500 for an improvement of at least 2 MPG, $4500 for an improvement of at least 5 MPG.

Here’s the WSJ chart describing the benefit:
WSJ Cash for Clunkers

The bill has two purposes:

  1. Removes older, less efficient cards from the road. Many of the cars that qualify are probably worth less than the $3500 or $4500 voucher, so consumers are still holding onto them because it makes sense to. This would give that added incentive to upgrade.
  2. Increases sales of new cars.

There are downsides to the bill though – the bill would call for the cars to be crushed and the vouchers would only applicable towards the purchase of a new vehicle, rather than a used one.

I like the idea of it but I think we’re creating a lot of special tax credits that prop up various industries. Also, not everyone is able to take advantage of these new credits, which is a bit unfair. The prime example is the $8,000 first time homebuyer credit, which was created to artificially boost the housing sector. Now we have this proposed $4,500 credit that will only help people who are close to buying a new car.

What do you think?

(Photo: wickenden)

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57 Responses to “Cash For Clunkers Program”

  1. Judy says:

    is this the start of limiting used cars available to low income people – forcing them to use public transportation? And in a few years will the prices of new cars and gasoline be regulated by the government so that the middle and upper class cannot even own a car? When the supply of new cars becomes limited – will the government decide who gets them? At that point the majority of us will be dependent upon public transportation – most likely run by the government. Our movements will be very regulated – I am starting to feel like a speciman in a bug collection!

    • wizardprang says:

      I am as right-wing and suspicious of government as they come, but that theory simply does not make sense to me.

      I cannot see how this law will restrict access to used cars – chances are the car you want would not qualify for the credit/allowance, and you would probably not want one of the vehicles that does.

      T(r)olls and roadside cameras, however, are another issue entirely… but are not germane to this discussion :)

      • Judy says:

        Thanks for your input – I am concerned that this program, besides wasting tax dollars, has a second agenda – destroying the used cars so that they are not available to people who cannot afford new ones – plus the parts will not be available to people who still own the older models so it will be harder and more expensive to repair them. The used cars that will qualify for this credit may not initially have that much of an impact on the market, but it may just be the start of more programs and laws that limit the freedom of choice and adds more government regulation to every area of our lives.

        • Anonymous says:

          This is the most relevant section of this thread. This program isn’t about helping dealerships, however it is about clearing inventory to make it easier to close all the dealerships that the government decided to scrap. This is really only going to help the banks making all the new loans. Also each sale will send tax revenue to the government. You might think “but the government is spending money to generate tax revenue???” No, the government is going further in debt and generating tax revenue, because tax revenue is “liquid”. And as far as this program “limiting cars available to low-income people”, well you can bet some of that “liquid” tax rev will go towards helping to buy new gas-sippers for low incomers since there will be fewer junkers available for purchase.

  2. Brittany says:

    When I first heard about this bill I was extremely excited because my 1995 Buick Regal is on it’s last leg. Doing research today though, I have found that the qualifications state that the old car has to get 18mpg or less! My car gets a combined 20mpg! I am devastated. There aren’t too many cars that get <18mpg. This seems like a way to reward the rich since they were the only ones that were able to afford the expensive gas guzzling SUVs over the past 10 years!

    • Jason says:

      Well it’s going to benefit me and I am farthest from rich as you can go. I make less than 25k a year and luckily I was rich enough to pay 600 dollars for a 96 Ford Explorer with 200k miles a few years ago. Yeah me having a whole 600 to buy that piece of crap of car, yup big reward for me and my richness.

  3. Jayden says:

    Ok. This is not good for consumers. Look at all the scams popping up on the Internet and at dealerships with this program. If you don’t watch closely, you’ll be taken advantage of. Watch video,

    http://tinyurl.com/nlv3ed

  4. Thomas says:

    I’m trying to do this right now but my junk 1992 BMW 325i comes as “unknown” in the Vehicle Category and it is a passenger car, it get a combined gas of 16 mpg. This program was rushed through and they went to run our health care. I don’t really agree with the program but if you going to do something then do it right. I will not get the 4500 because the lazy A@@holes in the govt. They can read a bill before signing it and they can’t do anything correct.
    Tom

  5. The_Duck says:

    What people don’t understand is that this program will NOT help low-income families who can’t afford to have a car payment! Sure you get $3500 or $4500 trade in value, but you still have to pay for the rest of the vehicle! How can lower incomes do that?
    For example : A family of 4 with only 1 adult working and the other unemployed, 2 small children in school. After they pay their mortgage, utilities, grocery bill, etc … there isn’t any money left over for a car payment! This is just dumb. Plain dumb. The only people who can afford to do this Cash for Clunkers are people who have the money to buy a car in the first place!
    Let’s get real America ! ! !

  6. Just Me says:

    The_Duck, I don’t think this program was made to support the low class of America…
    The thing that bugs me is that my ’96 Chevy Lumina 3.1L is rated at 21 combined MPG. When I fill it completely which is 16 gallons, I can drive it for about 13 days, at 21 miles per day…

    When I do the math…
    13 days x 21 miles/day = 273 miles per tank
    273 / 16 = 17 MPG

    And the 21 Miles I drive, about 16 of them are highway.
    Although my car is truly below the MPG mark, the government statistics show that it is not…and therefore my clunker does not qualify.

  7. glenda says:

    this is just another example of people trying to have things they can not afford, and they are being enabled by the government. Didnt people learn anything from the housing bubble bursting?? People were given loans they couldnt refuse, but couldnt afford. I think we are a nation of “gotta have it now”. I teach my kids the importance of saving. But just to correct a previous comment, there is a difference between low income, and low class.They are not the same, a rich person can be low class.

  8. Ruthless says:

    This program should bust anyone in the face that is looking to buy a new car through this deal. Hell what is wrong with a good efficient used car. Surely you can get one through this program, or at least I hope you can. There is no way in hell I’d put another bill on myself. So if you can only buy a new car out of this program, then to hell with it.


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