How many folks do you personally know that can walk into a dealership and pay cash for a car, with or without $4500 of My/your money? I figure up to 95% of those taking advantage of this tax money snatch are financing. Wanna take that bet? I have tried to float a loan lately, I got the same reply that many people are getting today: "Sorry, your credit is good, but we took a real hit last year." Those dealerships may not be using subprime lenders, but the deals on the financing are unlikely to be as good as a buyer paying through the normal channels would get. They may be in for an unpleasant surprise down the road. Bank have to loan money before they can make interest from it, see my above response, banks aren't taking any chances lately. Even folks with spotless credit are getting shot down left and right lately. Revenue is indeed always good, but if the spender doesn't save anything for later when a rainy day hits they're left all wet. There must always be a careful balance between saving and spending, and if you look at the demographics for the CFC so far it ain't rich folks with big nest eggs trading those clunkers in. They're largely the same middle class folks who were spending more than they earned last year maxing out their credit cards and buying overvalued homes. I have little debt and good credit personally, I could have thrown a $50 tranny in a beater truck I have out back and bought a car, but I just bought a car two years ago, and didn't want any more debt while the recession is still on. Do you honestly believe that anyone taking CFC money had the same thought? No argument there.
I am financing, so what? With the $4500 and the cash I gave them I am able to make the small payment and STILL save money. It's not that hard to do. We floated a loan yesterday, actually my wife did, I just cosigned. Her job description is "homemaker". It was for 4.5% We went through the Credit Union . We are not rich by any means but we are also not those folks that spends more than they earn. We have no credit card debt. The car needed to be insured for the past year (to make sure you were actually using it) to qualify for the CFC program so your beater truck with the $50 tranny wouldn't cut it. The government has spent astronomical amounts of (your/our) money in the last 8 1/2 years but all of sudden it's a bad thing? Where was all this whining two years ago when the economy was headed into the crapper at warp speed?
This one's a double edged sword for me. On the plus side, it has put a lot of laid off people (such as myself) back to work in the auto industry. But on the other, the man/idea is unbelievably stupid and it's already broke But what I find to be most depressing is what becomes of the "clunker" trade-ins. I watched a customer of mine (a local car dealer) fill the oil chamber of a "clunker" with sand and intentionally blow the engine up. A piston actually shot out of the engine and embedded itself in some dry wall. He explained that this was neccessary, according to the laws of the plan . But what killed me was that this "clunker" was a late model, immaculately kept Jeep Liberty that most broke Americans woulds give their lefty up for I'm sure uncle Sam will get a little something for the scrap value, but wtf?? This vehicle would have easily sold for 6-8K, no matter how poor the milage was. What a friggin' waste, in every possible way!
