Cash for Clunkers and Why I Think it is a BAD idea!
Been a while since I went on a rant. Please allow me 5 minutes to state my peace about Cash for Clunkers (CFC). IMHO, CFC is a bad idea for many, many reasons:
1) It puts people into new car loans that shouldn’t be buying new cars (can’t afford the car…)
2) It teaches people to buy new cars which is a poor financial decision knowing how much the car will depreciate when you drive it off the lot
3) It takes useful cars off the road
4) It continues to teach Americans the attitude of throw-it-away and buy new
5) Where will the CFC stimulus money come from?
Now an example of #2.
CNN Money ran a story telling what people got in place of their clunker. Here’s an example:
Traded: 1993 Ford Explorer (15 mpg)
Bought: 2009 Hyundai Elantra (28 mpg)
“Cash for Clunkers made it possible to buy a new Elantra. It was an absolute no-brainer. The sticker price was $17,500, and I paid $10,500.”
Interesting. A no-brainer? I did a search on autotrader.com for newer model Hyundai Elantra’s. I found a great used car at half-the-price of the new one he bought… Used 2006 Hyundai Elantra GLS for $5,300 with 42,000miles. Half the price and still, probably, a decent car. And I bet he could have sold the 1993 Ford Explorer to some sucker for $500 or $1000 so they could get the CFC rebate.
He then pays maybe ~$4500 for his upgraded car – and not $10,500.
CFC. Another brilliant idea from Washington.