Thursday, August 20, 2009

Cash for Clunkers?

Let me say right off the bat that I don't agree with this program. First, a car that's still worth $4500 isn't a clunker. A clunker is a car that looks bad, runs bad, and costs more to maintain than making payments on a new car.

Secondly, I would never recommend that anyone buy a brand new car. A good part of the value is lost the moment you drive it off the car lot. If you buy a car for $30,000 and it loses 10% of its value in the first 30 days, there goes a third of your "cash for clunkers..."

Most people will have to finance a new car. If you do, DON'T think that you're paying the sticker price for the car. Multiply the amount of the payment times the number of months you have to pay and that's your real price.

There's another reason. If these "clunkers" are destroyed, what do people who need to drive older used cars find to buy? Bus tickets? That may be great in Washington D.C., but it isn't very practical if you live out in the country, or your city doesn't have good public transportation, which pretty much covers the rest of the nation.


  1. Wow! I sooo agree! I have this big old van that we barely drive because it does cost so much to do so. But it is GOOD, what a waste to have someone destroy it just because it isn't economical. We are keeping it to drive to go camping etc. I drive it around town a little and to go get groceries and whatever.

    I think that people might need an option to buy a good older car if necessary.

    My son and his wife just bought a "newish" car...talked the dealer down and paid cash. They are very young and I, for some reason, felt the need to tell them to start saving NOW for the next car they have to buy. He said, "I know, Mom, we've got a plan!"
    I wish I had a plan when I was his age! Thanks for the good tips!

  2. Sounds to me like you raised a smart son, Beth! :)

  3. I acquired a "clunker" from a relative for $300 only defect is a dent in the front fender that cost more to fix than the car was worth (so said the insurance company). I have been driving it to work for two years now, co=workers joke about it but they are the ones making carpayments not me!

  4. A $300 clunker that runs makes sense to me!

  5. Okay, there are times when the program does work to the consumer's advantage. Case in point - I traded in my 220K 1994 mini-van that got 16 mpg that had two non-working doors, and was about to drop the transmission and bought a New Nissan Versa (bottom line, Auto/AC but no radio or electronic bells and whistles - a 2009 last year leftover (discount # one), I got the 4500 for the van that I paid 2800 cash for over six years ago. I also got a Nissan cash back insentive of 1250 (discount number 3). Then I paid cash - I paid less than 8K for a car that I plan on driving at least ten years. Oh, and I have free lifetime oil changes, a lifetime powertrain warranty, and a 100K dealer bumper to bumper. My insurance barely went up at all, and this was going from libablity to full coverage.

    I wasn't planning on buying new - in fact I was looking used, but this worked for me. And since I drive over 60 miles a day between kids and work - I needed a small economy car that will last.

    See, occasionally cash for clunkers does work to the consumer's advantage - if used correctly.

  6. And how many times will it/has it been used correctly? If you're careful and money smart, you can make almost any situation work for you.

    I have you beat, though... 8 years ago, I traded in a worn out Geo Metro for a Ford Contour and paid, besides the trade in allowance, $4,000 for it. I'm still driving it and will drive it for a few more years. I pay the minimum for license plates each year and my insurance is a little over $300 a year. I have had it in the shop twice - once for a bad gas cap that caused the computer to freak out and once to replace a direction signal component. Cost all told around $500. For 8 years, that's not bad.

  7. While I wasn't in the position to take advantage of this limited time opportunity, I knew a few people that did and it really worked out for them.