The Cash For Clunkers program (C4C) is the most brilliant plan I have seen from a President.
Basically, everyone with a beater has an opportunity to get a new car for almost nothing. On top of that, the environment is cleaned up a little. Frankly, I don't see how it's not a win-win for everyone.
I watch the news on TV and read the online publications (my apologies to the newspapers of America, but why spend money when I can find it online for free) and I hear comments about President Obama spending taxpayer dollars again. I hear the "socialist" name tag tossed on him a lot. I hear them say that this is setting up a false end to the recession, but I don't hear them talk about how this program will benefit the country.
Let me remind you of what has transpired over the past year:
This program has $3 billion set aside to purchase the clunkers. At $4,000 a car (average rebate) that's roughly 750,000 smog polluting, possibly unsafe, gas-eating vehicles removed from the streets of America. These 750,000 vehicles are going to be replaced with something that is more fuel-efficient, has the latest safety equipment and pollution controls.
When you multiply the 750,000 new cars times the average sales price of a typical fuel-efficient vehicle ($15,000), you will gross a little over $11 billion dollars. That's an $8 billion dollar profit!
Now, add the interest that the typical consumer would pay.
If you receive a 10% loan over a 5-year period, that adds $4,000 to the total of the new car sale. And guess what? That puts another $3 billion back into the economy.
Wait! Did I say $3 billion? Isn't that what the program cost? WHOAH!!!!! The program paid for itself and it gets even better.
Remember the government took over a lot of the financial industry with taxpayer money. The insurance companies will reap some of this (new car insurance). The banking industry will reap some of this (loans, late fee's etc).
The auto industry has been depleted of 750,000 cars. They had been complaining about having 6 months worth of inventory. Now, they will have around 30 days of inventory which is where they need to be in order to grow. Autoworkers can go back to work. Second-tier workers (fast food restaurants, grocery stores, etc) can go back to work.
Cash For Clunkers is simply a brilliant plan!
For example, you could get a brand new car for less than $10,000 if you qualify for the C4C. Let's assume you have a 1986 vehicle that averages 18 MPG combined city/highway and you meet all the other requirements above and listed on www.cars.gov
Nissan has a vehicle called the Versa. If you purchase the 1.5S, it will cost you roughly $13,000. Take out the $4,500 plus the scrap money from the junkyard (let's say $100 at the most) and the total cost of the car is $8,400.
Remember, you still have negotiating power because the $4,500 is not a dealer incentive!
If you do nothing else, the very least you need to do is convince the dealer to pay the tag, tax and title fees. That's at least $500 knocked off the total sales price. If you finance it for three years at 10% interest, that adds $1,357 to your total cost which will be $9,757.00. Your note would be roughly $271 a month. I could do another vehicle, but you get the point.
This administration in a little over 100 days since taking office has pulled off one of the greatest saves since the depression WITHOUT having to go to war. Remember your history. Without WWII, that depression wouldn't have ended so fast.
To me, there is no way this program could fail. The government wins. The auto industry wins. The financial industry wins. The environmentalists win. The workforce wins. And most importantly, you the average Joe/Jane win.
Frankly I don't see how the CNN's and ABC's of the news world don't see this, but then again maybe, just maybe they don't want US to see. But thanks to President Obama, I see clearly now.
Here are the requirements of the program: