The Error Of Cash For Clunkers Program
By gewcew23
@gewcew23 (8007)
United States
July 31, 2009 11:54am CST
We all should have seen this ads by now from your local car dealer saying bring in your older automobiles and receive up to $4500 on a new car. This was to help the economy and it did so. The problem is the CFC program is only a one time stimulus and will actually hurt in the long term. If you go out and buy a new car now, that car has already been built. Once a car lands in a dealership there is no new production needed. Auto industry only build for the future. A new car should last you for at lest five years, and actually they should last more like ten. For CFC to have long term success every year the federal government would need to renew the program. With a little over 2.2 million new cars owners tied up for at lest five year those are 2.2 million that will not be interested over the next five year for a car. That will mean less production at the assembly line.
3 responses
@OpinionatedLady (5965)
• United States
31 Jul 09
Not to mention the people who will turn in old cars they had no payments on and then drown in the debt they accrue. Just cause you can get the loan doesn't mean when your job fails you'll be able to pay the loan. Now people should think first but let's face it many people will go for the good deal without thinking long term, that is a very big chunk of how we got to where we are now.
1 person likes this
@OpinionatedLady (5965)
• United States
1 Aug 09
One of which I am quite sure our Government knew and understood.
@revellanotvanella (4033)
• United States
1 Aug 09
Yea, Im hearing dealerships are ending up with a load of traffic but half the people are not qualifying for the CFC programs and Im sure a percentage getting hounded into making impulse buys, cars they cannot afford or need.
@spalladino (17891)
• United States
31 Jul 09
Actually, I read somewhere...and no, I don't remember where it was so I can't post a link...that the average length of ownership of a new car was 3 years before the recession hit. I do know that my parents and one of my sisters trade in theirs every couple of years and have been doing this for decades. I have a couple of friends who lease and their leases run from two to three years at which time they trade the vehicle in for a new one.
As far as production goes, the individual dealer inventories are shrinking as people buy the cars sitting on their lots, encouraging them to put in orders for more. As long as folks are buying there will be production. The problem has been that folks weren't buying and vehicles were piling up at distribution lots all over the country.
1 person likes this
@spalladino (17891)
• United States
1 Aug 09
The ones who currently aren't making their loan payments probably can't. I didn't read anywhere that this program guarantees anyone an auto loan so buyers would still have to qualify. As far as whether or not anyone can afford to buy anything...that's a personal decision. If you end up with a similar monthly payment yet spend less on gas, you actually come out ahead.
@OpinionatedLady (5965)
• United States
1 Aug 09
So many can barely make the payments they have or are not making the payments, how can they go out to buy new cars?
@goldeneagle (6743)
• United States
31 Jul 09
This is a classic example of what is wrong with our government. They always start these programs, but it turns out they have DRASTICALLY underestimated the cost. The same thing happened with the medicare program.
1 person likes this
