Cash for Clunkers – Final Numbers and Thoughts
Sat, Aug 29, 2009
As most people know, the Cash for Clunkers program wrapped up recently. Some view the program as a great success while others see it as a program that has put America deeper into the arms of debt.
The press release from the Department of Transportation touts the success of a program that stayed within budget, took fuel inefficient vehicles off roads and stimulated the auto industry with new car sales.
The CARS program came to a close Tuesday night with nearly 700,000 clunkers taken off the roads, replaced by far more fuel efficient vehicles. Rebate applications worth $2.877 billion were submitted by the 8 p.m. deadline, under the $3 billion provided by Congress to run the program.
This is a win for the economy, a win for the environment and a win for American consumers, Secretary LaHood said.
Final rankings for Cash for Clunkers
The final rankings from the program were also released with Toyota Corolla and Honda Civic leading the pack in new cars purchased. Pickup trucks and SUVs led the list of trade-ins.
Top 10 New Vehicles Purchased
- Toyota Corolla
- Honda Civic
- Toyota Camry
- Ford Focus FWD
- Hyundai Elantra
- Nissan Versa
- Toyota Prius
- Honda Accord
- Honda Fit
- Ford Escape FWD
Top 10 Trade-in Vehicles
- Ford Explorer 4WD
- Ford F150 Pickup 2WD
- Jeep Grand Cherokee 4WD
- Ford Explorer 2WD
- Dodge Caravan/Grand Caravan 2WD
- Jeep Cherokee 4WD
- Chevrolet Blazer 4WD
- Chevrolet C1500 Pickup 2WD
- Ford F150 Pickup 4WD
- Ford Windstar FWD Van
Debt stimulated by the program
Financial gurus like Dave Ramsey are less pleased with the results. There is concern because of debt stimulated by the program for people who can’t afford a new car loans and the program will have to be funded by the American taxpayer. Here are some of Dave’s final thoughts.
The Cash for Clunkers program was designed exactly for people who should not take advantage of the program. You trade your $2,000 clunker in for a brand-new, shiny $20,000 car, and the only way you can afford it is with a high-interest payment. That just means you really couldn’t afford it to begin with. Doesn’t this sound like the sub-prime mortgage problem all over again?
Another bad thing about this program is that we, the taxpayers, are paying for the new cars! It’s morally wrong of the government to take money away from us—against our will—in the form of taxes and give that money to someone else to buy a stupid car they can’t afford in the first place! This is theft, plain and simple.
Cash for Clunkers is a program that redistributes wealth in the name of the environment, and it’s going to be a curse on the car dealer and the manufacturer that carries the paper. It’s going to hurt the broke person who bought a car he couldn’t afford. And it’s already a problem for our country, because it’s adding dollars to the national debt.
I think Dave Ramsey’s words accurately describe my final thoughts as well. I knew I couldn’t be a fan when I first learned about the program.
The economic recession has been difficult for many Americans. Not having cash emergency savings and debt have compounded the problem. I can’t understand how a program that stimulates more debt for Americans and our government can be a good thing. As personal money managers, we need to look at these programs wisely (there will be more) and apply a simple litmus test of debt or no debt before deciding to press forward. Our government, should do the same.
What are your final thoughts on the Cash for Clunkers program?
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Tags: Cash for Clunkers, Dave Ramsey, Debt
“Doesn’t this sound like the sub-prime mortgage problem all over again?”
No,not even close.
I spent three years in mortgage marketing.
This time you have to show an income to debt ratio.
I’m not sure how you come up with your comparisons.
Dennis Sweatt´s last blog ..The Plutonian
Dennis,
Thanks commenting! I thought it would be interesting to include what Dave Ramsey has to say about the program. Maybe there is more scrutiny on who is getting loans now as you mention, but the fundamental concern I have is the additional debt for the individual and our government.
This was good for the Japs(Honda, Toyota, Nissan) and the Seoul Brothers(Kia, Hyundai.) Obama gave GM and Chrysler to the UAW, so why not make it for American cars only?
big problem I have with it. you get $4500 to go get a $20,000 new car that most people can not afford.
Just because you can buy and make payments on a new car does not mean you can afford it.
Dave ramsey teaches that if you are not a millionaire you cant afford a new car and the big loss of value over 4 years (new cars lose over 60% of value in the first 4 years).
I say at the very least, if you cant pay cash for a car, new or used, you cant afford it.