Highlights from the Dave Ramsey Show

The program only applies to new cars & the"cluckers" or beaters MUST be shredded or crushed to avoid their resale. Such a "deal" no one needs!

It's a very stupid program. And you would need a goverment issued calculator to make the math work!
Go Clunkers!!! There needs to be a DR bumper sticker for all the Cluckers. I am proud to drive mine.

I would really like help with this decision. I drive an older vehicle that gets 13MPG. I was planning on purchasing a vehicle this year. Trade in Value for my vehicle is $1000.

If I purchase a new vehicle at $12,000 - $15,000 and receive the full amount of $4500 for the cash for clunkers subsidy, as well as, pay $5,000 down on the car (about what I'd pay for great used car) so I am now at $9500 down and owe $2500 - $5500 and pay the full amount left on the vehicle within 6 - 12 months with APR of 6% I only accrue about $150 - $300 in interest (actual math for interest shown) would it not be beneficial?

I know Dave's policy on things, but the math clearly shows for my situation it actually does make sense. Consider a trade in value of $1000 with $300 interest is $1300, I still receive a savings of $3200 on the car with the program.

When I drive the new Toyota Yaris, or Honda Fit off the lot, does it depreciate $9500?

Take into account that I have never driven a car that was newer then a 1994. The fact that I stay with my vehicle for a long period of time would suggest to me that I will get out of this vehicle what I put into it.

Please respond with facts and real personal finance advice. I am not wanting "This program sucks...plus its stupid" You will win me over with reason. :)

Did more research, Kelly Blue Book is estimating in 5 years the Honda Fit will retain 40% of its initial value. This puts it at $6000 estimated value in 5 years.

The Toyota Yaris is estimated value of $5200 in 5 years with %40 retention.

I most likely will be driving the car for upwards of 10 years.

I am still waiting for a response from someone. Is there a way to ask Dave himself? I've laid out the facts and needed financial advice. This is not a political issue as Dave's response to the caller, its a financial one.

I may need to call in and ask Dave the "reason" why the program is so stupid. I have still yet to see any data/stats/proof that its "stupid" and (1,2)I've actually seen stats that most vehicles, 9 out of 10, being traded in are trucks/suvs and being traded in for passenger cars. Again I wasn't asking anyones political leanings, I wanted to know if my situation makes sense for me.

(3)As 13 million people work in the Auto industry in this nation, and an Annual $10 Billion Tax revenue is generated from car sales, I would like to know the macrofinance as well as personal finance issues at hand.

Again this is not an attempt to stir up anything, just claiming something is "stupid" is childhood recess tactics and has no meat.

Citations:


1. http://content.usatoday.com/communities/driveon/post/2009/07/68495642/1

2. http://www.autobloggreen.com/2009/07/30/report-9-of-top-10-clunkers-being-traded-in-are-large-trucks/

3. http://www.grist.org/article/why-the-health-of-the-auto-industry-matters-to-you

Blake:

This program is "stupid" because it wastes tax payer money to help people pay for cars when they should buy their own dang cars! Plus, it is a huge 'tax' on the environment (see my previous posts). As for your Yaris math:

If it loses 60% of its value in 5 years, then why not buy a 5 year old Toyota that gets the same gas mileage? Then, you will know you are getting the biggest bang for your buck and are on the downslope of that depreciation and not losing so much every year. The math NEVER works for new cars...even Toyotas. I bought a brand new foreign mini van for $27K and have regretted it every day since the day I bought it. I got it for 0% interest and paid it off in 2.8 years and now it's only worth $13K. Do you know how that makes me feel? Like a complete idiot....It only has 27,000 miles on it and it's worth $13K. Stpuid me; Don't be stupid you.

A point to consider when looking at the used Prius. At 100,000 miles you have to replace the battery which is expensive so if you consider purchasing a used Prius asdd that to your calculations.

I just purchased a G3 on the cash for clunkers. I had an old van getting about 13 mpg. I got $4500 plus another $3500 in rebates plus GM Employee pricing thanks to family so I drove the vehicle off the lot for less than $9000. Paid for .. no loan and I'll drive it unitl it falls apart. It's not my dream car or even close but i runs well, it has a 3 year warranty and I'd never have gotten $4500 for the old vehicle. I'd have been luck to get $1K from a private buyer. I don't mind the huge depr
depreciation because I'll have the new car for 10 to 12 years and I really think I offset most of the loss of value with all of the incentives.

Here are a couple of other "unintended concequences" that our government is famous for not considering.

1. This nifty little program will likely put upward price pressure on sub-$5000 cars across the country. Why? Because lots of people will fall for this, and those inexpensive cars are going to be removed from the market by all-knowing fedzilla. Supply goes down, while assuming demand remains unchanged equals upwards price pressure. Not to mention that the government is to an extent setting a price floor for these cars. This will make a harder for those looking for that $1000 clunker to find one for $1000. So in addition to suckering in people who really shouldn't be buying new, it will make it harder to find those "clunkers" for those of us who have more sense. This will do more to hurt people at the lower end of the income spectrum than it will to help them.

2. As Dave reported the other day, this is going to put more strain on the auto salvage industry as a significant portion of their business is going to dry up, what with the government destroying otherwise serviceable vehicles.

Ahhh, witness the government buying one of your cows so that it can milk it, poor the milk down the drane, and then shoot it. We are witnessing the "government knows best" attitude in action.

To blake,

If you "drive the wheels off a car", all the more reason to NOT buy new. I think your second option of saving up and buying a solid, dependable car for $8k makes a lot more sense. I just sold an '03 Mazda Protege5 with 50k miles on it for $7,800. The car had leather seats, was garage kept and looked and ran like brand freakin new. I sold it because my wife hated it, otherwise I would have kept it.

BlakeCR (if you are still reading):

IIRC none of the dealers have received a dime of the $4,500 they are supposed to get for the subsidy. They might never get it.

Would you take the deal without the $4,500 subsidy? If not, don't do it.

Ok Blake, I did the math, following Dave's rules.
Option A, buy used: I checked Edmund's: a used Toyota Insight (2005) runs around $6000 if it has low miles. If you sell your car (stay clear of the dealer!), then use the $1000, plus your $5000, you have paid off the car.
Option B, buy new: You get a new $13,500 car, $4500 off for the cash-for-clunkers, and $3000 dealer cash off as well, so you get a 6 month, 6% loan for $2000. You will pay $339.19 a month for six months and pay a total of $35.15 in interest.
Going back to option A: you have an extra $339.19 a month to invest or pay off debt. I'll assume no other debt, so you put it into a mutual fund money market account, earning 12% interest.
Back to option B: after your 6 months you also start putting the $339.19 into the money market account.
6 years later:
Option A: You sell your used car for $1570 and have $35,510 in your money market account.
Option B: You sell your used car for $3530 and have $31,490 in your account.
You let that money sit.
20 years later:
Option A: you cash out $386,860
Option B: you cash out $343,034
At retirement, it cost you $43,000 to have a new car that you were going to drive the wheels off of anyway.
Do the math. Always pay with cash!

My boss says along with the new cars that people are buy for clunkers. They will have to full coverage car insurance. In some parts of the country ed velorum tax. So where is the deal?

I really like Dave, but the 12% return is pure nonsense. Long-term, after inflation, stocks return less than 7% per year. I own a lot of stocks and have for a long time. Believing that you can earn 12% annualized returns, year after year, is insanity and has no basis in historic fact.

I think one point that needs to be made it that it's not only about the math.
Debt and financial matters are spiritual and emotional.
The feeling I have from owning my car and motorcycle could never be put into a calculator.

People, its called new car fever. And it comes and goes. Case in point, I actually considered this for
a fleeting few moments. Daves advice is flawless. It has no downside. The mere fact that so many people
can't figure out if or how good this deal is should be a real strong indicator to avoid it! Remember, you
have no payment at all now. I had already forgot about the insurance until the other guy just posted about
it. Your insurance will go up...a lot! And as Dave says, what about all of the risks? What if you lose
your job, or get injured? The depreciation is killer. Spare me the savings on gas and repair. Anyone
considering this just has the fever. Keep that car payment in your wallet and when the fever strikes just
reach for the wallet count the money and be cured!

I manage an automotive recycling facility. We are located in a medium sized city in Middle America. We purchase used vehicles and dismantle them to sell the parts to garages, bodyshops, etc. The government says they are helping to resuscitate the economy , the the automotive industry, the banks and the insurance industry. It is our opinion that they are not helping anyone. This like all meddling is nothing but smoke and mirrors. A temporary fix if anything. This program is going to temp many people into buying a new car who would otherwise not even think about it. Many of them will go into debt, many of them will default on their loans. This will end up hurting the banks rather than helping them. The automotive industry has a wide range of members not all of them are auto manufacturers and new car dealers. The auto manufacturers have received enough of my hard earned money to mis-manage. The new car dealers are probably not going to benefit very much from this program in the end, the $ will end up back in the manufacturers hands and the national insurance (salvage) auto auctions hands. The new car dealer will have considerable administrative costs tied up in the reporting and disabling of these vehicles. It takes a minimum of 4-5 lbr hours to disable the vehicles the way the government has outlined. This cost alone will be more than the $50 scrappage the dealer gets to keep as well as a hazardous material has to be purchased by the dealer to run through the engine and all parts which the oil flows through. The dealer then sells the car to the insurance (salvage) auctions, or directly to the salvage facility. The government has refused to answer the question of where the difference in sale price and the $50 the dealer gets to keep goes. Someone will be grafting that off, but who we don't know. If the dealer sells the vehicle to the salvage auctions the auction will charge the dealer a fee for selling the vehicle, and the auction will charge the purchaser a fee for the purchase and a fee for forklifting the vehicle through their gates, and if online bid a fee for buying via the internet. Total fees collected will vary based upon the selling price of the vehicle to the recycling facility. The minimum will be somewhere in the neighborhood of $85 per car, maximum fees $550 & on up. Once an automotive recycler purchases the vehicle from either the dealership or through the auction they will have to drain all of the fluids from the vehicle; oil, transmission fluid, freon, antifreeze, and the solution to disable the vehicle, and remove any mercury switches from the vehicle. The facility will be unable to test any of the parts on the vehicle that have to have a running engine in order to test, they will not be able to sell any part that the oil would normally flow through as well as the engine. I can't speak for the entire industry, but our top seller is engines. The car must be crushed withing 6 months of purchase. The scrap metal will be sold at a reduced price because the metal prices will be driven down by the over abundance of scrap metal. This will in turn lower our nations GNP. The yard will have to report to the government at a minimum of 3 times per vehicle. All of this extra work will work to increase prices of the parts that we can sell to cover overhead. This will, in turn, hurt the body shops, used car dealers, and repair facilities. The auto recycler will also be hurt by the reduced number of "clunkers" which would be fixed up and use our current inventory. The garages & bodyshops will be affected because there will be less cars to work on. The government keeps throwing out this vast # of people employed in the "automotive industry" these numbers include the people who work in body shops, used car dealerships, garages, automotive recyclers, and auto crusher companies. Most of these people will be harmed not helped by this program.

Just by driving it off of the lot you will probably loose most if not all of the $4500 in depreciation, not to mention selling fees etc.

All I know is that the man who wrote Stocks for the Long Run, Jeremy Siegel, found that stocks returned, on average, 6.75% per annum after inflation. By choosing 1989, you chose a year just before the great stock market boom. Why not go back to 1970? Of course, that would give you an extended period when stocks were flat and it would lower significantly the annualized return. Now, mind you, I have about 90% of my money in stocks and believe that in the long run it is the place to be for most folks (though as one ages, he should begin to lower his stock holdings for reasons which have been well demonstrated over the past two years), but only by cherry picking the years analyzed can one come up with a 12% annualized return. I could play the same game and find that stocks have been flat, that is, returned nothing except for dividends, since 1998 (the year the S&P first cracked 1000, which it closed above today for the first time this year). And, of course, if I used October 2007, I could show that stocks were a real loser. No, the long term data are clear, over the long run, one should expect no more than about a 7% return after inflation. And that ain't bad.

Deborah's analysis is spot on, IMO. I guarantee more thought went into her post than was put forth by all of congress in coming up with this garbage. And in addition to higher insurance that comes with owning a new car, don't forget higher taxes. And governments just LOVE to overvalue your car for tax purposes. I owned a '98 Avalon with 150k on the odometer and a 25% damage disclosure on the title. KBB said the DEALER RETAIL on the car was $7500. My local thieve, I mean, government said it was worth $11,900 - note that I didn't even pay that much for the car used 3 years and 40k miles earlier! And that gap seems to get worse as the car gets more expensive.

Speaking of people going out and taking on debt who shouldn't, my aunt-in-law makes about $1300 per month after taxes, tops, as a home-ec teacher. She has an $800 per month house payment. That already sucks. And now, thanks to those with the government who are here to help us, she now owns a new Ford Focus that probably lost $4k the second she signed the title (at which point it became a USED car - technically no individual owns a new car). And it comes with a wonderful $300+ / mo car payment. Remember, the price on the new car is probably going to be a ripoff.

Tell me again how someone living on a take home pay of less than $1400/mo makes do after writing an $800 house payment and a $300 is helped by this deal?

I had the option to do the cash for clunkers and decided to sell my 1999 Jeep Grand Cherokee for $2000 cash. Then I went right over to my neighbor's house and purchased his 2000 Dodge Durango. The Durango had 80K less miles on it and new tires. I would of been an idiot to take the cash for clunkers. Still working my way out of debt, Dave's way.

I agree with Dave 100%. I drive a PAID FOR 2001 Jeep Cherokee Limited 4x4. 15-18 MPG.
This will last me another 4 years pretty easily and during that time I will save for something else in the future. The government only wants the American public to continue to go debt into debt. How dumb.

My wife and I did the FPU course and since then have only driven "paid for clunkers". Hers has 150k miles and mine has 200,000 plus. I work on them myself for parts price only, and now see it as a game to get them to 500,000 if I can. Oh, and by the way - my clunker gets 30mpg, and hers gets 20mpg....

Here's what we did with the "clunker" program.

Traded in a '93 Astro Van with 173,000 miles we
bought 4 years ago for $3,000. We got $4,500
credit toward a new Chevy HHR with 8 airbags
(the van had none) and gets estimated 26 miles
per gallon (van got 14 mpg downhill with tail
wind). Oh yes, we paid cash for the HHR.

We didn't go into debt, got a new, safer vehicle,
got $1,500 more than we paid for the van and
got a "clunker" off the road.

We hope this approach helps to settle your
stomach.

Blake, the program is stupid because taxpayers should not be subsidizing the purchase of other people's cars! We have over $1 trillion in deficits just for this year. We shouldn't be going further into debt to buy cars for people. If you want to buy the car, just buy the car. But don't expect anyone to be impressed with you taking out a car loan. What if you lose you job and can't make the payments?

MY HUSBAND AND I BOTH DRIVE OLDER CARS(2001) MINE IS A CHEVY PRIZM AND HIS IS A LUMINA. WE WORKED VERY HARD TO GET OUT OF DEBT(3 YEARS)AND LEARNING HOW TO TELL OURSELVES NO. WOULD I LIKE TO HAVE A NEW CAR? YES, BUT I WILL NEVER GO IN DEBT AGAIN.I AM FREE

Do american people not realize the government is stealing from the, then putting them in debt? The dealerships are making a mint, the loan companies are making rediculous amounts of money, and where are we? Left to pay a debt we probably can't afford. I know two people that have already claimed bankruptcy and had their car reposesed!!!!They paid $4500 more than they should have. SAD!!!!!!!!!

Just like the $8000 tax credit for new home buyers, the cash for clunkers disrotrs the true market and sets the stage for more pain to come, as those without $ should not be buying what the can't afford (hear that before?). Furthermore, the Feds are using OUR money borrowed from the future to "pay" for this. It is actually paid for by us all in the future form of higher taxes and devalued dollors. Once again, pandering politicians confiscating $$ from the responsible workers in this country.

Several comments have stated that they will drive their brand-new car into the ground, that they'll get so many miles out of it, etc. What about car accidents?? The possibility of a car accident (even a minor one will destroy the value of a car) is enough of a reason to not EVER buy a new car. My friend has been paying car payments for years on a car that no longer exists because of an accident which totaled the car.

SELL THE CAR

To W. Wise:

What is wrong with that scenario is that I paid for your $4500. The money didn't come out of thin air!

"Cash for Clunkers" is not a good idea. MOST of the cars traded in were not clunkers at all. They were perfectly good running cars, but the government convinced people that they "needed" a new car. So instead of a struggling family having a paid-for car that only costs them maintenance, gas and insurance, they now have an anchor around their necks, which in about 6 months will probably be repo'd or they will have to decide- diapers and food or car payment.

Hey, will that $4500 be included in your income for tax purposes?

One additional problem with Cash for Clunkers....think about the car sale gap it will create next year when 800,000 cars are not sold because they were sold this year. Doubt the car dealers will be smiling then.

Another thing about Cash for Clunkers - from what I have heard from people who work at dealerships is THEY HAE NOT BEEN PAID. They have low/no inventory and money tied up because the govt has not paid them the money promised yet.

Cash for Clunkers is a big joke!!! The Government found an underhanded way to give the auto dealers another bailout besides the billions already given. I understand that many dealers say they didn't get their money yet, however, we know that their money will come to them; they just want it now!
I have decided to never again get a car loan. As another writer said, the delaers always find a way to manipulate the paperwork.
A former acquaintance that works for a car dealership once told me this is how it is done. Remember, the government and most salespeople
are just the same; they will always tell you what you want to hear. Only the smartest folks will be able to see throught their schemes. For the most part, many of you here are the smart ones.

No only were many of the cars purchased by folks that couldn't afford them, those people now have to add the $3500-4500 to their income and pay taxes on it! So the taxpayers pay for the depreciation on a new car and the car buyers have to pay taxes on the tax money they got from us! Insanity!

I'm a DR Counselor so I've been saving up to pay CASH to replace my 1991 Dodge Mini-van. I have $6000 saved so far. When the program came out, I thought Hmmm, could theis really work? Could I take my minivan and add $4500 to my $6000 to purchase a really small better fuel economy car? Sounds like that should work... NOT. I couldn't get a single salesman to work with me because I wanted a BARGAIN and I wanted to PAY CASH! There is just no way this program worked in a manner that could have helped people. The $4500 per vehicle is going to help the current administration to tax us into oblivion. I'm going to hang on to my minivan and drive it until the wheels fall off! And, keep my $6000 for something else - probably to pay taxes... YUK.

And is it true that the $4500 is going to be taxed as income now? Some deal.

Yeah, maybe Cash for Clunkers wasn't perfect, but it has helped move cars that were just sitting there before. . And and as for taking our tax money forcefully . . . I would rather my tax money go to help people buy cars than a war of choice (Iraq) or to pay companies like Halliburtion, KBR, and Blackwater. At least no one died in the CARS program.

Dave we have 2 "clunkers" in our driveway. We are keeping them, we paid for them we don't want to owe on another car. We just paid off our only non "clunker" car it is probably the one that will go first. As for the "clunkers" we love them and we own them so no reason to run out and get something new to owe on. We are almost debt free and loving it in Washington, we are not perticipating in the recession either guess we are weird too but happy. Thanks for all the great information and teaching keep it up.

You go Kara! No thanks on Cash for Clunkers for me. I refuse to have a new car payment with all that interest again. I sold my new car when I started the Financial Peace University last year and bought a 1987 Cadillac Deville from an elderly couple that kept it in a garage for several years. Only 27K miles and in mint condition. I may buy a newer car one day but only when I can pay CASH for it! Until then, I am very happy to "clunk" around in my Clunker!

Dave, why aren't you in Bernake's job? Taxpayers are paying for everything.
But retribution is comming. Who's going to pay for the trillion dollar debt? Taxpayers?
Yeah, but in the comming years, they'll be less and less of the species.
Baby Boomers who are retireing, unemployement, higher education costs and little or no jobs
for that piece of parchment, teachers on the lower level, leaving or laid off, kids becomming
uneducated and illiterate. Oh and our pledge of allegiance to our new owners, CHINA.

And even worse..the dealers are obligated to destroy some perfectly good used cars that the overstretched buyer could buyer could have have afforded. How do we stop this government madness ?

I totally agree with Dave's comments regarding Cash for Clunkers! This is yet another prime example of our Administration not considering the consequences of such stupid programs.

I agree with you Dave. I don't understand why my tax money is being "given away" to other people so they can go buy a new car. I am so disappointed with this government, I feel like moving out of the United States.

Add on the taxes these "cash for clunkers" buyers have to pay yearly on their new purchases. Many can not afford the payments let alone the tags, taxes and insurance for the new cars.

I feel like I am being punished all over again!!
I bought a 1998 Sunfire convertible (Not with
anyone else's help, either.) I bought this car
as it has great m.p.g. and, since, technically it
was a used car, price wise, but new, warranty
wise, it was great for me and great for the
environment. All those people who bought great
big, gas-guzzling, overpriced cars they could not
afford are now crying. Where was their common
sense when they bought the car in the first place.
Now I am being punished because I did the right,
prudent thing and I have to pay for their nonsense
all over again. (First the housing melt down, now
the clunker melt down.) And, why on earth, could
those cars not be resold, instead of being made
to fill up our land fills even more??? Government
needs to get smaller, not bigger; but the best
jobs in this great country now seem to be working
as a gov. employee....take all of our free spirit
and 'out of the box' thinkers and totally break
us down!!!Wonderful!!! NOT!!

I think people miss the point on cars. It is to take you places, it is not an investment. They are always going to lose value. I drive my cars until they die and then get a "new to me" one. I love it when their value goes down - then I pay less taxes for them.

working in the office of a car dealership I get to handle all of the cancelations of after market products
that were included in car deals when these cars get repossessed. And I see alot of repossessions and I am
just going to see more now that this has happen.

I spoke to a freind that is a CPA and tax guy. He is pretty sure the $4500 will have to be treated as "regular income" for fed and state tax purposes.

This does not make environmental or economical sense. The carbon foot print and natural resoruces depletion that occured to manufacture the new cars significantly out weights the difference in greenhouse gas emmissions between the new car and the older vehicle in most of the cases and the natural resources depleted are not replaced.

The program makes sense for the commenter above named "blakecr." Purchasing a new car can be a very impulsive for a lot of people especially if such an "incentive" is given. If you have a clunker that you are spending bug

I am one of the "working poor" who would like very much to have purchased one of those clunkers. I rely on being able to obtain a good used car when mine can no longer be held together. Many of the cars that were trashed were perfectly good cars that could have been resold at a reduced price (or donated to the poor!) to people who can't afford to buy a new car (or, like me, are committed to not going into debt to get a new car). This concept was such a waste of a useful commodity and so thoughtless.

P.S. I currently drive a 1990 Honda Accord with 230,000 miles on it. It is in decent shape (some cosmetic issues) and drives very well.

I personally think this Cash for Clunker was a great idea for the middle income family. It's about time we got a break.

Everyone else from the senators to the low income people are so used to getting tax breaks, tax write-offs, food stamps, gov. housing, free health care, aid for day care. But for some reason the working middle class has been forgotten. Not this time!!

Lets face it, if people aren't disciplined enough to sit down and factor in if they can afford a car, a house or whatever they are purchasing...then they deserve to lose it. Don't blame the banks or gov., that's too easy. Everything doesn't come free and you have to work, save, and sit down and calculate your income vs your bills. Can you afford this, or do you just have to have it?? Learn to say NO!! You're not a kid any more.

Cash for Clunkers is fundamentally wrong on all levels. Aside from what Dave mentions about taking tax money from one to give to another to buy a car, it's just wrong to give money to people who made a bad choice to begin with. Not only that, many of these vehicles being turned in have many miles left on them, so what about the waste of energy building a car that won't be used for it's entire life, and the energy required to destroy these vehicles.

The timing of the Cash for Clunkers program was perfect for us--my son, a college student was driving home on a Friday and his 2000 Nissan truck broke down. We had been having major problems with the vehicle and when we limped into our mechanic he said the truck needed $2,500 for a engine overhaul.

We attempted to trade the truck in on a 2006 used car and were offered $1,000.

When we took the truck to new car dealers we were offered the $4,500 in the program plus a $1,500 cash incentive from the manufacturer. We ended up with a 2009 Nissan Versa, which should last my son throughout college. We did not finance the new vehicle, but paid cash. The new car ended up costing $1,000 less than several year old used ones.

While people talk about a new car depreciating when you drive it out of the showroom, if you buy a used car from a dealer you could be inheriting someone else's problems, AND the dealer has marked up the actual value of the used car.

Worked great for me! I traded a 10 year old Windstar with 186,000 miles and multiple problems (let alone the completely rusted out panels that gave it probably zero resale value) for a great little Kia with 6 year everything warranty, 10 year powertrain, 0.0% financing (otherwise I'd have paid cash) and 26 overall mileage. Besides, it's a heck of a lot of fun to drive and has a lot of useable space. I didn't go wild and looked within my means, almost bought a Honda Fit but too small. I would have liked a hybrid but [1] too expensive compared to non-hybrids, can't make up the difference and [2] no one had them to sell anyway.
The reason they destroy them is due to fuel inefficiency... I expect that it will drive up the cost of inexpensive used cars, but mainly trucks, vans, and big cars were only ones eligible to trade in, so smaller cars (better mpg) will still be there. And in any case, if a vehicle was in good enough shape to fetch more than 3500 to 4500, there's no reason to trade as a clunker.

Whoever above was wanting to know what happens to cars (beyond the Cash for Clunkers program) that are traded in and dealers don't sell, many times they sell
them at auction. Most major cities have them, and in many cases you don't have to be a dealer to bid and buy. If you are looking for a great deal on a car,
it doesn't hurt to go there. I've bought two cars that way, and have gotten really good deals. You do have to buy cash, though, which shouldn't be a problem
for us that are Dave-fans.

Cheers!

You could not have explained it any better Dave
!! Anybody that disagrees is blind! And there is no worse blind person than the one who refuses to see! It really is tempting to buy stupid things you can't afford but when the "Dave logic" kicks in and saves the day! I wish more people in Washington shared your views.
DAVE FOR PRESIDENT IN 2012!!!

How did "Cash for Clunkers" help the American people when most of the cars purchased were cars made on foreign soil? We helped other country's boost their economy while our country went further into debt!

Nothing's really FREE! That $4500 is counted as income on your taxes... I hope that doesn't just push you up to the next tax bracket or YOU will end up being the taxpayer that just got you that GREAT deal. heaven help us!

I went to a website that calculates if your car is a clunker or not.

My (bought new) 2005 Toyota 4Runner Limited V-8 qualified as a clunker. They will give me $4500.00 for it and then shred it.

Amazing!

I say, "Go jump!" (Oh . . and take Gov't run Healthcare with you)

REPOSTED FOR REBEKAH:

For the multitude of people posting the FALSE assertion that the credit will be treated as taxable, this is directly from the C.A.R.S website...does anyone read anymore?

"Is the credit subject to being taxed as income to the consumers that participate in the program?

NO. The CARS Act expressly provides that the credit is not income for the consumer."

Just another twist no one is talking about. As I understand it, that $4500 that the government "gave" you will be added to your gross taxable income next April, and you will need to come up with the tax for it.

This program is flooding the "salvage yards" with the Clunkers and driving down the price of scrap metal. One way we are working down our debt is by scrapping... That's right, picking up scrap metal sitting on the side of the road and taking it to the salvage yard and selling it. We make approximately $1,000 a month doing this, and we
aren't the only ones doing this...

i looked until my eyeballs fell out and never saw where anyone addressed the fact that if you are in the 20%tax bracket this "give-away" is going to cost you $900 in federal income tax. if broke folks think this thing is from heaven, give them an umbrella before uncle sam rains on their parade.

@ Jerry,

For the multitude of people posting the FALSE assertion that the credit will be treated as taxable, this is directly from the C.A.R.S website...does anyone read anymore?

"Is the credit subject to being taxed as income to the consumers that participate in the program?

NO. The CARS Act expressly provides that the credit is not income for the consumer."

Please remember, the government did not give these people $4,500 for their clunker, we the taxpayers will be paying for this for years to come.

I am driving a '93 Camry that leaks oil, but still gets good mileage. It has over 413,000 miles on it. My husband has been telling me for years I needed to get a newer car. Thankfully I had been listening to Dave. When the a/c went out on it, I paid $300 for a new one. My husband wanted me to get a new car instead. Hmmm. One $300 payment, or $300 every month for several years. No brainer. Thankfully, he joined me at FPU and now he knows we don't have money for a $300 monthly car payment. Our daughter just paid off a $2,000 loan to us, and we used the money to buy a used car with that money. KBB said it was worth $3400, so we feel that we got quite a deal on it. He works for a Toyota dealership, and normally in a down economy like we have, people will get their older cars repaired which makes it better for mechanics, but now they just go in and buy a new one at the taxpayer's expense. This may help the new car sales, but what about all of the mechanics who make their living repairing the old cars? What about people who run auctions for older cars? What about junk yards who make their living selling parts from cars in the junk yards? What about people who want to buy parts for their cars...especially once they stop making parts for those older cars...and like somebody already stated, what about those of us who choose to buy older cars and save the hit on depreciation, and stay out of debt by paying cash? And, of course, many of these people who got car fever and bo't when they couldn't afford to, will lose their cars, and won't be able to find any beater cars to purchase!

Another reason this program is dangerous is the
flippin' "Terms and Conditions" at the beginning of the website! How many of us EVER read those things before we click on "ACCEPT"? IF you click ACCEPT, you just gave the government access to EVERYTHING IN YOUR COMPUTER
FOR THE REST OF YOUR LIFE!!!!! READ IT! I AM NOT EXAGGERATING!!!

I heard a report on Fox News, I think, that of the 10 companies who sold the most cars during this debacle, only one was an American company: Ford. All the rest were foreign cars. Maybe those cars were made in the U.S., but parent companies were foreign. How does that help the AMERICAN car industry?

It only helps keep a few thousand people employed for a few more months.

I'm dumbfounded by the fact that all of these great minds who are managing this program are missing the fact that the majority of workers in the United States are employed by small businesses, not the mega-businesses.

For the multitude of people posting the FALSE assertion that the credit will be treated as taxable, this is directly from the C.A.R.S website...does anyone read anymore?

"Is the credit subject to being taxed as income to the consumers that participate in the program?

NO. The CARS Act expressly provides that the credit is not income for the consumer."

For the multitude of people posting the FALSE assertion that the credit will be treated as taxable, this is directly from the C.A.R.S website...does anyone read anymore?

"Is the credit subject to being taxed as income to the consumers that participate in the program?

NO. The CARS Act expressly provides that the credit is not income for the consumer."

For the multitude of people posting the FALSE assertion that the credit will be treated as taxable, this is directly from the C.A.R.S website...does anyone read anymore?

"Is the credit subject to being taxed as income to the consumers that participate in the program?

NO. The CARS Act expressly provides that the credit is not income for the consumer."

most people had money and paid cash, like us. At half price it was a bargin. 18777 for 9777. smart.

This is not democracy. Again, the mid-income guy gets taken advantage of. We are punished because we work hard to earn just enough to support our families. Punish me because I have a 5 year old car. Where is my $4500 gift?

Didn't read to see if anyone else mentioned it...By destroying all these cars they are also causing the used car, and used part markets to inflate. This hurts us good consumers who will continue to drive their car that gets them by! Come on government you are helping the wrong people!

Not sure if anyone answered this yet but a car salesman told me they pour something into the engines of the "clunkers" that get traded in so they can never run again.

Well, I said exactly what you did on this
It is the same situation as the housing loan
debacle. I am no financial genius but it was
obvious someone would have to make the payments
on all those new vehicles. DUH!America, get
real! Where is our common sense??

This program is sooo easily believed that it's a great way to go ahead with the idea. My husband and I almost did it, then we sat down and really looked at the idea and it was a BAD IDEA. We knew that we would end up with car payments when our "clunker" was paid off and it is in great condition for the most part. Not pretty, but it's been great in the snow and gets us around. We knew if we couldn't pay for the "new car" up front, then it was a bad idea. Also, I can see how this could be a problem for many people who don't see the potential problem and how it will come out of tax payers pockets eventually. Govt.'s always like to try to "fix" things and it never works.

Another thing I wanted to say is has anyone ever watched Repo?? Well I can guarantee with this program going on, a lot of cars of going to be taken back by the finance company, then what happens? They can't sell it for the worth of the loan, they go into a crises, then the wonderful govt. is going to have to bail out YET AGAIN a mistake they made.

Along with all the facts that Dave stated, you never seem to hear many comments about the fact that the program blew through the first billion in about a week and can not tell you where it went, so they authorized another 2 billion for the program. However, there are numerous dealers that are complaining about not being paid yet. Any government program where you need to front the money is a bad idea.

The 'cash for clunkers' program has now created a shortage of clunkers. I am trying to purchase a clunker for my 16 year old with cash and now it's extremely hard to find one! And I flat out refuse to purchase one that I cannot pay cash for! Yes, the program was a sham on several levels - now dealers are finding that out too since they are having trouble getting their money from the government. Get the government out of business for they have no idea how to conduct business - if they did we would all be out of debt!

Has anyone thought of how it will effect those who chose not to buy a new car they can't afford?? Since the clunkers are destroyed there will be fewer used cars for those of us financially responsible enough not to buy a car out of our price range. Supply and demand will cause used car prices to go up. Am I wrong?

Yes, Stephanie, the dealers are suppose to put a saline solution into the engine in place of the oil and
run it for a specified amount of time until the engine is siezed. I had vendors calling to let us know
that they had it on hand for purchase. One dealer bought a 55 gal. drum, not from me, I do not beleive in
ruining a perfectly good vehicle.

Thank goodness I'm not the only one who thinks that this is just a mini-housing fiasco again! The dealers and lenders will loan just about anyone the money to get into this government program including those that can't afford the payment to begin with!!!
Oh, but we're saving the environment and stimulating the economy! No, we're not!. The short term sales bump only results in short term work for the already shaky automotive industry. As soon as the program ends so do the sales and the industry slides back into the slump. HELLO?! And the environment? Now these cars get thrown into a landfill if they don't get recycled in some way and the environment suffers.
Here's a thought for the government. Why didn't we take these clunkers that are traded in, some of which are running just fine and put them back into the economy. By this I mean give them to any of the hundreds of charities in the country which train low income and at risk students a trade like auto repair at little or no cost to them. These students learn a skill that they can then go out into the workforce and be productive thereby putting tax revenue into the economy. These repaired vehicles now are sold or given to low income people such as single moms who now have reliable transportation and are able to gain employment thereby lessening the welfare roles and adding a tax paying citizen into the workforce. The repaired/tuned up vehicles run better, producing less pollution than before and are thereby better for the environment. Makes sense to me.
But, no. Let's just pour some sludge into the crankcase to seize up the motor and throw it in the landfill. Who benefits from this? No one!
But if Obama and the government says it's the right thing to do then it must be so.
It's just so sad that the Obama lovers are so blinded with admiration that they won't think for themselves and realize the folly of this program.
Well, in a few months when the new cars start getting repo'd and the banks start eating more bad loans all we can say is "We told you so."

The clunkers program was a blessing to me. I had been thinking about buying a car for two years so I jumped on the
offer. I traded in a 95 GMC Safari van that had been driven
by two of my sons and paid cash for a Hyundai Santa Fe. It is
the first new car that I have ever owned and "Cash for Clunkers" made that possible.

Dave, you are so cruel. You see, I was enlightened by a couple of left-wing Deomcrats. Cash for clunkers is great. Why shouldnt everyone have the opportunity to by a new car? It's like health insurance. I thought we should have reform to find a way to get most everyone some basic level of insurance. But when I explained I made a choice to work for a slightly lower salary, but with better insurance, I was once again enlightened by the wisdom that I should have worse insurance so that everyone can have equal health insurance, regardless of our employment or spending choices. I happen to have a modest house and cottage, but I no doubt will be enlightened once again that I should forfiet onceof my homes to ACORN so they can efficiently reallocate that resource to a more productive use (ie: give it to a homeless person). Come on Dave, see the light!!! (For those who may be reading this befoe thier morning coffee, yes, this is sarcasm.)

saddest part of the cars programs was it did little to help the domestic lines the winners were the import lines hyundai,kia, honda etc. and many of the individuals taking advantage of the program were paying cash for the cars while I am sure many were sold at high interest rates as well it was nice of the taxpayers to buy all these folks new cars.

The first thing I thought of was - how they going to pay the payments plus the full coverage insurance?, I am sure there will be a news article within 6 or 7 months.
Thanks for all your help Dave, g.a.

Hi Dave,

Your cash for clunkers article is right on the money. Thank God, someone has a brain. I have been so sick about the whole thing. Why are you the only one who gets it??? It's a no brainer. I have been saying the whole time, before it passed---how stupid is our government??? Can't anyone see what is going on here? People love debt and the government loves people to be in debt. It's nuts, backwards, they do not want the people to be financially literate. If everyone really understood what was going on, they would never stand for it.

Thanks for educating,

Tracy Renee
Gene's Auto Repair
37 Tennessee Street
Vallejo, California 94590
www.GenesAutoRepair.com

I pastor a samll church in Bonifay, Fl, and my wife works for a non-profit organization. Together we make about $44,000. Her car is a 2007 Taurus with a six year loan which we intend to pay-off in June. I have a "clunker" a 1984 Mercedes 300D Turbo which I paid $500.00. It has 432,000 miles on it, and I love it. I am hoping to put some money in it and fix it up. Other then the Taurus the only other debt we have is my school loan. We will have that paid off in 3 years. Oh, yeah, we are going to Disney for a week for vacation. We are paying cash. It's not the governments place to pay for clunkers nad help people to get in debt. The results of this will be felt by my children's children. God Bless American stupidity!

So only broke people take advantage? what an assumption! It gets some cars off the road that should not be there And the person holding off on buying a new vehicle, who can pay cash...receives incentive to do so. Paint a picture with a mighty big brush don't we? This is aimed at stimulus.....I did not see broke folk flocking to the dealerships. I thank the feds for a huge offset for my recent purchase.

That isn't the only way it is taking money out of our pockets. My husband takes small dents and dings out of cars. Most of his business is used cars but, because of the CfC program, there are fewer used cars on the lots; the value of the ones that are left have been driven up; consequently few are being sold. His work is way down.

If the government would keep their noses out of it the economy would work itself out.

In talking to a friend of mine who works with auto dealerships. He told me this is different, whereby they must qualify for the loan. if not they are turned down. Ths housing market qualified everyone, if your qualifed or not. How do you respond?

ive read alot of the comments and im puzzled by something..why do people keep focusing on what the book value of a car is???..who cares what the book value of your car is and how much it drops in 5 years if you are gonna keep it much longer than 5 years???..if someone is buying a new car (cash or very little financed) to have one that lasts 10-15 years and saves them a ton on gas during that period , they probably have little care what the book value is..book value of cars only matters if you plan on selling it in a few years after buying it or you are a car salesman..book value when you arent selling matters about like the jewelry value of your wedding ring when you are happily married and not planning on a trip to the pawn shop

I just heard Dave do a commercial for a Central Air Conditioning company
in Nashville. He finished the commercial saying "and you can now get
up to $1500 tax rebate from the government for your new AC unit."

I can't quite figure why Dave is so up in arms about people taking a $3500-$4500
credit for their clunkers when he doesn't seem to have a problem with people
getting a government tax rebate for their clunker central AC system.

The goverment is also currently giving a tax rebate for energy efficient window replacement, does he have a problem with that?

Doesn't seem like there is much of a difference between any of them.

Go figure.

I have read that a majority of the cars turned in for the program are american cars, and the majority of the new car purchases are foreign manufacturers. How would this help the American companies?

And coming this fall will be "Debt for Refrigerators" as the government actually subsidizes people getting rid of their paid for energy inefficient appliances and getting new, borrowed-for energy efficient appliances. So, first the taxpayers of today and tomorrow (and for years and generations to come) helped buy new cars for folks (most of whom went into debt for them) and now we will help these folks buy refrigerators. I once lived in a country that had a free market and which rewarded hard work and thrift. That country is no more. See http://www.businessweek.com/bwdaily/dnflash/content/aug2009/db20090821_304909.htm

But . . .but . . .but Dave, don't you have any FEEEEELINGS for the people who can't afford a car? And besides, the taxes won't affect the middle class-- just those eeeevil wealthy people, who have more than they need or desrve anyways.

[End sarcasm] Yes, I definitely agree that the Cash for clunkers program was a bad idea. Since when does the government do *anything* efficiently? And these are the same people we want selling our healthcare down the river in the name of fairness and feel-good emotions?

Hey-- love your show, keep up the great work!

"What is wrong with that scenario is that I paid for your $4500. The money didn't come out of thin air!"

YOU did not pay $4500 yourself. Maybe you paid 3 or 4 pennies, along with the rest of us taxpayers. And the person taking the deal is, presumably, a taxpayer themselves and gave their fair share to the $4500. If I pay taxes, why shouldn't I then get the benefits through government programs like this? As long as the program is available to anyone with no discrimination.

Further, why does a program that helps middle class Americans bother you - why aren't you a million times more outraged at the billions the government handed over to the banks and other large financial institutions who messed the middle class over for the past 8 years in the first place?

I never liked the war in Iraq, but I sure did pay for it along with all the other taxpayers. It comes with being part of a nation.

Personally, I don't like new cars and I drive a '97 GMC Jimmy that I bought in 2004 for %5000 cash. I am close to having my first $1000 baby emergency fund ($300 to go, will have by November) and then have less than $10,000 debt to knock off, and I'm estimating that will take 10 months.

The Clash for Clunkers might be stupid for a number of reasons, but this attitude of "why should I (an American citizen) contribute to you (another American citizen) getting some money toward something?" is what really bothers me. I guess you won't like the fact that, because businesses cut my wages over the past few 5 years even though my company was wildly profitable from 03 - 06, then still moderately profitable to the present, and upper management sure didn't take a pay cut, I am going to take advantage of both the $8000 first time homebuyer rebate and the $2500 for first $4000 of college education for my kids, because otherwise I would not be able to afford it. I thank God that finally someone is helping the middle class. Sure, I would rather the people directly responsible for putting us in financial danger be the ones to pay me back directly, and I wish there was a way to directly tax only them or escort them out of the country if they won't pay, but I am willing to give a little IF it is going to things such as education and home ownership for middle class Americans.