Cash for Clunkers - Does it Work for You?

jipster

Any of you guys in the biz come across a really bad C4C deal. Where the person is so eager to take advantage of the program, they are trading in a vehicle worth $4.500 or more, just to get the $4,500 rebate? Wouldn't surprize me. :surprise:

ateixeira

Silly scare tactics.

Plus they don't know a thing about IT security. Many of those things could not happen.

Clueless.

Good for laughs, though.

tidester

An extra sale is made.

That is far from obvious. Also, by cutting gas mileage you are further reducing federal and state revenue because taxes are not collected on the unsold gasoline.

tidester, host
SUVs and Smart Shopper

thorman944

it sure does. my old dodge truck is now a clunker. it got 8mpg vs the 11mpg on the cars website. my wife gets the new nissan versa as she has a longer commute. i get my toyota cressida back from her. her gas milage goes from 20 mpg to 30mpg. my gas milage goes from 8mpg to 20mpg. we save between 12 to 13 gallons each week and over 50 gallons of gas each month. along with the toyota burning about 1 quart of oil for every 300 miles and the old dodge burning 1 quart of oil for every 60 or so miles, we will now buy 1 quart of oil due to leakage/blow-by each month instead of 8 quarts of oil. we will save about $21.00 in oil and about $125.00 in gasoline. not to mention that our estimated maintenance costs on our vehicles will drop by approximately $75 each month (including regular scheduled maintenance to keep our warranty current with the new car).

$221 dollars in savings goes pretty far towards covering the $218 car note and $24 increase in insurance.

it's going to cost me $21.00 monthly to upgrade my old dodge truck with no A/C and a 1 speaker radio to a brand-spanking-new nissan versa that is fully loaded with all the comfort/convenience/safety features that my dodge lacked. oh, and it is a 4 door car so my back won't hurt when trying to get my daughter into the carseat unlike my 2 door truck.

---------------------------------------------------
as a conservative republican it works for me too. it's a financial incentive for people to purchase. there is a positive effect to auto manufacturers, manufacturers of auto parts and components, automotive repair facilities (face it, nobody takes their clunker to the mechanic - however a new car sees a mechanic regularly to keep the warranty ongoing), the banks and credit-unions are being flooded by loan requests and almost every request has NO POTENTIAL RISK for the lender. most clunkers are being replaced with new cars selling for under $18k. therefore there is 25+% downpayment on the vehicles (35% in my case). the borrowers will NEVER be upside-down on their loan. they can total the car in the first 6 months and still get more money for their car than they paid for it. a borrower can miss their first 3 payments, have the car repossessed and the bank can still re-sell the car for more than the loan amount and keep the downpayment. or if the borrower is regretting their decision, they can sell their new car for less than it's worth and still pay off the loan in entirety and walk away with no loss to their credit rating.

the local carwash (who washes a 20 y/o rustbucket), electronics retailers (lots of GPS and radio upgrades being purchased for those new cars), even regional tourism should increase if the program is expanded and millions of people can now afford a mini-vacation or daytrip at 30+mpg vs the 15mpg that made them wary of the costs of gasoline for such a trip. (NHTSA is estimating 16mpg avg difference in new vs old mpg).

this is just a sound economic stimulus. the government will get it's money back without question due to the taxes and increased income derived from hundreds of thousands (or hopefully millions) of people buying new cars.

the best part is that exxon (and it's like) are going to get hurt by this and they deserve it. the oil speculators almost bankrupted me with $4.50/gallon gas. anyone wonder if exxon-mobile is the biggest speculator of oil prices in the world/??

isellhondas

Yesterday, I wasted two hours with a guy who had been to five different Honda dealers trying to grind the last nickle out of a deal. We were busy and he couldn't have come at a worse time.

Then he sprung his "clunker" on me! He hd researched this to death, literally.

But, alas, his car didn't qualify!

I'll be glad when this is over.

ateixeira

They'll be out of money again in a week. I really thing they should lower the incentive to $1000-1500.

kdhspyder

Yes that is a consideration but that's the first and foremost assumption.

We will know soon after then numbers come out for July and then August and Sept. The SAAR was about 9.5 to 9.8 million units. This was only intended to add about 1 million units the the 2010 MY sales figures.

selden

This is a very interesting analysis. The only part I quibble with is the assumption (still to be proven) that CARS will generate 250,000 EXTRA sales per billion injected. If CARS sales are a bubble in July-August, followed by depressed sales for the rest of the year, the effect will be much less profound. At this point, we just don't have the evidence to know for sure. Having just bought a new vehicle through CARS, I'm in the camp that believes the program has been and will be a tremendous success.

rnittany

C4C doesn't require 22 MPG - just 4 MPG better then your clunker for $3500 and 10 MPG better for $4500. Unless I misread the thing. (18 MPG is the max you can trade in, so if you just make it in you are indeed at the 22 MPG, but I think you can go lower depending on your trade).

philliplc

it does require 22 MPG min for new cars, but not trucks.

rnittany

> Found this website helpful: "Let Ford Recycle Your Ride"

Be careful - this is not an entirely accurate website. Best to look at fueleconomy.gov yourself.

1949ford

On July 10th, we dropped our car off, gave our title and insurance card and put down a deposit for our car. We were called to come and get our new car on July 30th. However after we waited an hour and were about to leave we were offered our contract with a new addition but could not get our car unless we signed a second finance contract guaranteeing the dealer $4500 on the deal (this was not part of the contract we signed on the 10th). We did not like the pressure or sign this new agreement and were told that we could not get our car back as it was in the government system. We are now waiting for our dealer to get paid before we can get our car and have no way to check upon what has happened as there is no transparency in the program. Here's the real issue, we signed contract that was to take effect when final government rules were to be published and we met all requirements….and we met government rules but not dealer new rules. Four weeks of auto rental wasted so far and lots of frustration. It seems black and white here as no mention of dealer getting paid was in our contract and we have no leverage as we signed arbitration section of contract. Dealer has no interest in talking to us as GM & owner has made their minds up. Take it or leave it. And we are stuck.

mitchflorida

A lot of the problem is of your own making. Why drop off the car on July 10th when the program's rules weren't even known until July 24th? I can't blame the dealer for wanting you to guarantee the $4500 in case funding runs out or there is a last minute change in the program rules.

You have waited this long, you might as well wait another 5 days until you get your vehicle.

1949ford

The rules were known. The final rules were not posted until 27th not 24th and you are right I was dumb to sign up for program so early and work with a dealer who decided to change rules and contract. Not sure where you are located but we wasted an entire morning for 2 people at original closing. The last minute introduction of additional contract was not in our agreement we signed. We also found car we wanted and that is why we signed up early. Have bought 20+ new cars from 8-9 dealers and never had situation like this nor have I ever had a dealer decide to change agreement at closing. We are the buyer not seller, and you don't sell many cars or anything requiring your customers to quarentee you your profit and you certainly can't expect to have satisfied customers. Have no choice but to wait for dealer to get paperwork and procedures completed correctly and would not have purchased in first place if we thought rules would have changed.

ck90211

The new purchase (cars) needs to be 22 mpg or better. Walked away from 2 deals (a Toyota Solara Convertible and a Volvo C70 because their EPA combined mpg are 21). Many of the European brands (other than VW) are probably kicking themselves on not working the fuel injection/transmissions to deliver 22 mpg+. They sure are missing out on this feeding frenzy.

Sandman6472

Which stealership did you purchase from? After you get the car, I'd rip 'em real bad on the survey for their lack of honesty about your deal...these guys really stink and as such just reenforces the bad reputation that most car salesmen have. They have no integrity at all and I'd never spend any $ there and also spread the word about these dishonest jerks. Play it forward to protect future buyers from their dishonest tactics.

Agreed that y'all jumped the gun a bit, but for them to ignore you and want to change the terms of a signed contract is below low. A shame actually because they are making money in the process. They're scum and hopefully this will not sour how you feel about the honest dealers out there because there are actually many other dealers who value their customers and appreciate them. Sorry that you got a bad one. Hopefully this will not sour the new car joy.

The Sandman :shades:

mudhousehold

I would give the dealer the benefit of the doubt. Really, nobody predicted 1) submission process is hard and time consuming; 2) approval turnaround is so long; and 3) so many people are jumping on the train. Before the program started, almost everyone thought if the two cars qualify, there should be no problem in getting the rebate (or at least the approval) within a couple of hours. But now, nobody is sure whether the applications turned in last week will be approved because it is not clear how many of those are waiting in the pipeline and whether there will be enough money. The dealers are nervous too. I doubt that they wanted to screw you, but they are just no longer 100% sure about the rebate any more.

I'm just a C4C customer also waiting anxiously in dark. I wish there were a way for us to check on the status of our applications.

imidazol97

>But it is kinda annoying that I, a homeowner with no kids, provide funding for the public school system while the renters next door, with their 3 kids, pay nothing.

The renters next door pay the property tax for the owner; it's included when the owner calculates the rent. The owner does not calculate a monthly rent with a little profit and then say at tax time, "I'll just pay this $600 tax bill for the property out of my profit and take a loss on that rental." Indeed, where I long ago lived in a rental outside Cincinnati, the 1 bedroom apartments paid more than the small houses on the street paido-each apartment paid more.

kathyc2

Numbers can usually be manipulated to "prove" whatever point someone is trying to make. If you are trying to sell this argument, I'm not buying.

Let me state that I am all for decreasing dependance on foreign oil. But, just going by the numbers we will have the following DECREASES in tax revenue by using less gas to name just a few:

Oil companies corporate and employees.
Companies that deliver gas corporate and employees.
Federal and state excise tax on gas
Sales tax on gas.
Gas stations corporate and employees.
Beverage and snack companies corporate and employees (how many times do you grab something when you are filling up?)

267 x 250,000 x $2.50/gal x 5 yrs = $800+ million
267 x 250,000 x $3.00/gal x 5 yrs = $1 Billion
267 x 250,000 x $3.50/gal x 5 yrs = $1.2 Billion

I would think very few of the clunkers are going to make it another 50,000 miles.

Your numbers assume that NO ONE would have traded in their clunker for a new one without the program. All of them will be at some point. This just speeds it up, or catches it up from the people waiting for the program.

You forgot the interest that we are paying on the money. 3B at 3% compounded interest will be another 2.4B over a 20 year period.

You have said many times that the bill was written by the auto makers to help the auto industry. Don't try to turn it around now into a tax generating program.

imidazol97

>When you pay your $2000 in sales tax on your new car it goes to the state, county and city. Uncle Sam allows you to write that off as a deduction

Did that recently change?

kathyc2

Part of the ARRA. Sales tax deduction- either as an additional itemized deduction or added to standard deduction for new (not preowned) cars purchased between 2/17/09 and 12/31/09.

1949ford

Agree and please understand I have been in business and know what it is to take a loss....no one wants to do this and I certainly don't wish dealer a loss or problems...I simply pointed out we had an agreement that the dealer altered at closing and I am still paying for a rental. Never ever discussed signing a finance agreement for dealer $4500 when I purchased my car and I would not have bought at this or any dealership if that had been the case. Dealer handed us two contracts to sign and we already had a contract that was not honored. What happens if we lose $4500 subsidy due to dealer paperwork errors? My neighbor is driving a Honda Fit he bought and signed a return agreement if deal fell through which seems fair to me as both dealer and owner suffer some...in my case only I am out. Other companies have chosen different approaches to problem.

joel0622

The 4 bangers qualify for the 4500. We have sold the crap out of Fusions durin this thing. But hten again we always sell allot of Fusions. It is our #1 selling car.

joel0622

and while those who want to dump their clunkers may have moved up purchases, those who don't want to or don't have one may decide to delay vehicle purchases because of the mad rush of clunker buyers gobbling everything up and driving actual selling prices higher.

I say it will be the exact opposite. I think business will thrive when this is over. Those clunkers who did not not quite make the cut here will be a hot commodity in a couple of months. Think of all the used car dealers who are going to be willing to kill for inventory. I know big time wholesalers who have not bought a car in two weeks.

chunglau

But it is kinda annoying that I, a homeowner with no kids, provide funding for the public school system while the renters next door, with their 3 kids, pay nothing. Sure, their landlord does, but the renters get off scott free.

Here is how I look at it, and why I think it is great that my property tax helps schools even though my kids are no longer in the public school system: Good schools improve, or at least, maintain, property values. If you do not invest in your schools and let them degrade, property values will go down.

As a homeowner, I have a vested interest in improving or maintaining property values. The renters don't have nearly as much to gain from improved schools.

Which leads to a very important point about the C4C program, from my perspective. A large portion of my net worth is tied to US stocks. I benefit hugely when the S&P500 goes up, and, sorry to say, vice versa. If the C4C has the effect of raising the S&P500 index by 1%, I would have a huge return from the $10 to $20 of my tax dollars that go into the program. And I think the stock market is reacting positively to the program. This is strictly a personal gain that is independent of government revenue increases, energy cost improvements, and the moral niceties, etc. Anytime I can spend a little bit of my tax dollars to prop up the stock market, I'm all for it .

joel0622

A 4v sable wagon quals, a sedan does not

joegiant

joel, when I first started investigating a purchase under this CFC plan, I did in fact look into the Fusion as a possiblity. I searched out several dealers to see if they had an "S" model which I'm told did a bit better in the mpg department and would allow me to receive the full $4500 voucher from Uncle Sap. Long story short, I couldn't find a dealer who had one in stock...anywhere! Plenty of SE's, SES's, SEL's etc. etc. I did NOT like the Focus at all. Strictly was interested in the "S" Fusion. Why weren't any available...at the beginning of July? Not now of course. Everything has been picked over. Was Ford makin' 'em yet or were they still in transit? Just curious. TIA!

joel0622

You have also never bought a goverment subsidized car either. We are not doing it but I don't blame a dealer for having that stip.

kdhspyder

Yep 5 yr Treasury Notes go for about 3%. That's $30 Million per year per $1 Billion borrowed. It's clear that the increased tax receipts have that amount well-covered.

I've said many times that the bill was written by the auto industry. However it's clear that in stimulating business it also stimulates tax collections...the two go hand in hand. That's inescapable.

What's clear is that this program is not nearly as simple as the majority of posters herein would believe. The net cost per $1 Billion borrowed is well below that number.

Your presumption about the clunkers not lasting another 5 yrs is equal to my presumption that they would. When the first group goes through the system we'll be able to have a better handle on what the gain in fuel economy is. 10 mpg is realistic from what I've seen and what the initial submissions are. There will be a significant amount of fuel not used and thus money not spent.

explorerx4

i agree with what you say about how a good school system has an effect on property values.
imo, another effect of the C4C program will be more buyers who did not have an eligible vehicle enter the market.
if my 'miser neighbor' can get a new car, so can I.
I can always justify it by noting that my car was not a 'clunker'.

joel0622

Guess I won't get anxious about getting our $$$. Just saw on the news that out of 225,000 claims 1600, have been paid. Thats right folks I said 1600 NOT 16,000.

What is that like .007 %

imidazol97

The clunkers being traded for the program so far sound like they were actually cars not being driven. They were optional cars and were driven only when the lower price of gasoline made it seem economical enough. Trading them in will not have a great gas savings for that reason.

If the clunkers were being trade for people needing financing and the people are the ones having trouble making ends meet, then I can believe the cars were being driven more and switching to a more ecomical will effect some gasoline cost savings.

On the other hand, those who posit that the clunkers will cause a great gas savings need to look at the reduced tax collections and what that will mean for the state and federal government programs which depend on those tax incomes.

explorerx4

to continue that line of thinking, i read an opinion that a higher fuel mileage vehicle could lead to more annual driving.

kdhspyder

Yes there is no question that the tax collections on fuel used will be lower as more efficient vehicles are driven...but that's an internal issue for us to deal with in our own country.

The fact that we aren't offering as much support for the international price of oil thus not supporting countries that hate us and/or would do us harm is an issue which threatens us. The other issue is one that we can deal with internally but which doesn't threaten us.

'Energy security' also means that by using less we don't have to fight and compete as hard for the limited supplies of oil with the massive demands of India and China.

kdhspyder

This is false because there are only so many hours in a day. At some point you run out of hours in the day. If you were suddenly given a vehicle that gets 200 mpg instead of 20 mpg would you then begin to drive 20 hours a day to and from work instead of 2 hours?

More realistically if you got a more efficient vehicle would you suddenly go an hour or two out of your way to and from work simply because your 'gas ration' had increased.

Obv illogical.

tidester

Obv illogical.

You're kidding, right? If I got a 200 mpg car I would certainly consider a driving trip to Lake Louise or Yosemite but I wouldn't even dream of it with my 20 mpg non-clunker clunker. Adding an hour to my daily driving routine is silly and qualifies as a red herring.

tidester, host
SUVs and Smart Shopper

patti11

I bought a Honda the end of July-C4C and it's in limbo. The dealership advised me that tomorrow, Friday, they will NO LONGER be processing orders. I have been waiting 11 days for proof of registration to come in from the DMV that I had the vehicle registered for one year, actually 11 years. My registration which is in my possession, is renewed every two years, and only reflects 11 months with 13 months left before renewal. I disposed of the old registration and the dealer will not accept this tomorrow. Could anyone please give me advice? I'd appreciate it very much. Thanks a bunch!

catbui

I had a really painless deal at the dealer. They were really helpful and not pushy or anything. I had one insurance stub and one registration stub. He did asked me for more proof of the insurance but the registration was a non-issue since I've had my title in my name for more than a year. Everything was done in a couple of hrs. You could ask your dealer to check. I don't think my dealer would've done the deal unless he could with what I had.

mitchflorida

I would look for more co-operation from the dealer, or else just cancel the transaction and go to another one. The other suggestion is to go in person to the DMV and get the proof that way.

Some states let the dealer check car registration on-line.

catbui

here ya go, I found this quote directly from the final rule...

"To implement this process, the agency has determined that proof of registration
may be demonstrated by any of the following: a current State registration document or series of registration documents in the name of the purchaser evidencing registration for a period of not less than one year immediately prior to the trade-in; a current State registration document showing registration in the name of the purchaser and a document of title that confers title on the purchaser not less than one year immediately prior to the trade-in;"

So, current registration in your name and a title in your name that's more than a year old is all you need.

1949ford

Have no problem either with STIP if it agreed upon at purchase but don't expect me or any buyer to get excited about it being done at closing or having agreement that violates purchase agreement brought in. Do it up front and I am not writing or complaining but don't call me in to get my car and at last minute say you need to sign a second contract we have not discussed or you can't have your car.

beam19

The registration thing has been tricky for a lot of people...I traded in my car last Monday with only my current registration card that dates back to December as my title is over one year old, and everything went through fine and I have been driving my new Fit around since then. I am also hearing, though I haven't confirmed, that now you only need current registration due to the difficulties people are having acquiring the extra registration card...if I were you I would find another dealer.

kdhspyder

LOL...but would you do it every day?

kdhspyder

All the deals done in first several days of last week are paid..on schedule. Many more are due to be paid shortly. The test will come when the deluge from Fri, Sat, Sun last week get submitted.

mudhousehold

Is this based on data from your own dealership? Where are you based? I'm curious because our dealer told us our application was submitted last Thursday among 50 others, and they still have not received a single approval yet. They say that's because the east coast is 3 hours ahead of us, so we (in California) are a bit late in the pipeline.

explorerx4

another unintended side effect from C4C, a stressed out sales person. :P

chaudry

Patti11,
I went to my DMV here in MD, it took about a couple of hours and they gave me a certified copy of history of payments for last 4 years..so I guess you can do the same. I would get there first thing in the morning and takecare this.

jipster

Guess I won't get anxious about getting our $$$. Just saw on the news that out of 225,000 claims 1600, have been paid. Thats right folks I said 1600 NOT 16,000.

What is that like .007 %

Why the lack of faith with the U.S Government in getting paid back? It's not like dealing with the "Buy Here Pay Here" crowd. Relax.. you'll get paid. I guarantee it.

Now get back to selling the crap out of those Fusions! :shades:

christine118

My paperwork was submitted Monday...I'm hoping I hear next week everything went through okay! Not getting the car until it's approved.

I was very nervous last weekend because I didn't realize our title still showed a lien on it even though it was paid off. Good thing the bank was able to give us a release when my husband stopped in. I was scared it was going to be a process to get it, and I wouldn't be eligible.

kdhspyder

Yes this is our own store in SE VA.