Cash for Clunkers – Great Deals for Many
Cash Allowance Rebate (CAR) - Popular Beyond Expectations
Aug 2, 2009
The *Morris family are thrilled with a new and greener car under the government Cash for Clunkers program.
The CAR (Cash Allowance Rebate System) which is better known as Cash for Clunkers has been wildly popular. Slated as a July 2009 program to run through the fall, the money dried up in one week as new cars flew off the car lots; however, per the request of President Obama, the House of Representatives pushed an extra $2-billion through to maintain sales pending a Senate vote.
CAR Does Have Specific Requirements
Consumers are thrilled with the opportunity to knock $3500 to $4500 off a new car with an approved clunker trade in, and car dealerships are, of course, thankful to be selling many new cars off the lots. There are, however, specific requirements in terms of qualifying for the program, and car dealerships deal with a rather complex number of forms to complete in order to get reimbursement.
The long and short of all this, for consumers, is that quick action may be critical and also car buyers can expect it to take longer on the car lot to complete a car purchase (three hours in this example).
Each case will, of course, be different, but the Morris family story may be helpful in understanding how Cash for Clunkers works.
Morris Family Had Not Planned to Buy a New Car
Melissa and George had not planned to a buy a new car for a few years. The had one vehicle paid off, payments on a second newer car, and then an older ride for back up.
Melissa followed the news on Cash for Clunkers and was interested. She thought she’d just wait and think about the program. But, the money ran out fast, and she thought she had missed out. With the extra money pumped into the program, she decided to do the research and move fast if a purchase did work for the family.
Checking Out the Family Vehicle Qualifications
The two newer family vehicles were valued at more than $4500 (although one did qualify), so that was no deal. Cash for Clunkers is a flat rate of $4500, so the extra $2000 on the value on the SUV would put the family in the hole even though it would mean a more fuel efficient vehicle.
The older vehicle qualified and had a trade in value of $100 and blue book listing of $1100. That made it a wonderful trade in under the program. Instead of getting $100 off a new car, the family would get $3500 to $4500.
New Cars
The Morris family had not been thinking about or looking at new cars.
Armed with a notebook and pen, the Morris’ started early on Saturday – checking out vehicles and taking notes on features and prices. A good number of vehicles did qualify but not all (of course).
Some of the vehicles the family checked qualified for $3500 off while others meant $4500 off. The difference there was the difference in the miles per gallon (MPG). In order to get the highest trade in, the new car needed to get 10 or more miles per gallon more than the vehicle being traded in.
In addition, some lots offered additional cash off. One lot knocked $2500 off sticker price while another said, “We do not give cash off sticker on this program, because we don’t have to.”
Down to the Wire
The Morris’ narrowed it down to three cars.
One vehicle had XM radio built in, but Melissa noticed that added over $400 on the price list. The XM subscription was free for 3 months, but then the family would be paying monthly for another service.
The car that the Morris family liked the best was not available on-lot in a color the family liked.
The salesman listened carefully as the couple discusses the pros and cons (going as a couple or even with a friend can be a good idea). When it looked like the Morris’ might get a car from another lot, the salesman excused himself for a break and returned with an offer to knock an additional $1500 off the sticker price and to get the preferred color.
Cash for Clunkers – In the End
Melissa and George are thrilled to own a black Honda Accord which qualified for the $3500 of the Cash for Cars trade in on a 1995 SUV that had over 250,000 miles. While they had planned to “make do” for two or three more years (hoping the older vehicle did not break down completely), they were glad to have a chance to get a good deal on a new car and one that will cost less to fill up.
"We weren't thrilled to add a car payment at this time," said Melissa. "But, it's only $350 per month. Who knows what a couple of years might bring or even if the old SUV would have made it that long. This was really a deal we could not pass up, so we got right on it and no regrets."
*This is a true story, but the names have been changed to protect the privacy of the family.
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