Cash For Clunkers

[yakers]

Looks closer now: House passes cash for clunker bill to boost new car sales - Jun. 9, 2009

I have an old '98 Jeep Cherokee which might qualify, maybe too much MPG. Although the official gov site seems to say it would work: Gas Mileage of 1998 Jeep Cherokee 4WD

Anyone else following this development?

 

[ziggy29]

I have an old '98 Jeep Cherokee which might qualify, maybe too much MPG. Although the official gov site seems to say it would work: Gas Mileage of 1998 Jeep Cherokee 4WD

Anyone else following this development?

From the linked article:

Clunkers eligible for the program must get 18 miles per gallon, or less, in combined city and highway driving.

Yet another new program that penalizes people who made more responsible decisions in the past.

 

[FUEGO]

I'll definitely keep an eye on it and hopefully be able to exploit it somehow. Get a little piece of the government largess back into my own hands.

 

[Bimmerbill]

Maybe I'll pick up a couple of barely running $500 clunkers to get the $9000 downpayment...

 

[ziggy29]

Maybe I'll pick up a couple of barely running $500 clunkers to get the $9000 downpayment...

The moment the president's pen hits the paper on this one, those $500 clunkers will become $3000 clunkers.

 

[Culture]

Yet another new program that penalizes people who made more responsible decisions in the past.

You beat me to it. This seems to be the norm in government, Federal and State, Democratic and Republican. It seems to me that the art of FIRE is actually the art of preserving your resources from those would would take them for their own gain, more than anything else.

I.e., it is harder to keep your money from the government than to earn it. I know for me this is absolutely a true statement. I already give the government more than I spend on myself.

 

[FUEGO]

The moment the president's pen hits the paper on this one, those $500 clunkers will become $3000 clunkers.

I've thought about this, and if the details ever firm up, it may be worth a pre-emptive purchase of a few $500 or $1000 clunkers before the bill passes if it will be worth $4500 for a trade-in. Or perhaps dozens. Establish a secondary market for clunker sales. Maybe all those unemployed GM and Chrysler grease monkeys from the closed dealerships can come work for me repairing junkyard dogs to a sufficient level of operation to qualify for the $4500 credit. God Bless America!!

 

[John Galt III]

Glad to see somebody else knows about this. I think it is a bad bill for many reasons, but yes, I might take advantage of it if it passes. I own an 80's V8 clunker that I am emotionally attached to, but it can't last forever.

I wonder what the catch is though : From what I have read so far, the dealer you buy the new car from has to be involved, which may screw things up.

 

[Zathras]

Ziggy, it doesn't punish anyone, but it is true it doesn't reward everyone.
If part of the bill's purpose is to encourage behavior, why dilute it by rewarding those already following said behavior?
Sure, I'd love to get a retroactive refund, but it dilutes the benificial power to encourage the behavior in those that wouldn't normally do so.
As for buying a clunker, you would need to buy the clunker and drive it for a year, then you would be eligable.

 

[Zathras]

John, from what I have heard, the money goes directly to the dealer.
I am not sure if the dealers will discount the rebate up front, or pass it along once they get it.

 

[FUEGO]

As for buying a clunker, you would need to buy the clunker and drive it for a year, then you would be eligable.

From what I have seen, you just have to own it and have it registered for a year. Not sure that you actually have to drive it anywhere. I suppose one could buy it, park it on blocks in your backyard, place plastic sheeting and sawdust underneath to catch all the dripping oil, then haul it to the dealership to trade it in 366 days after you buy it. I think they currently plan to require that the car actually functions, but that may or may not be a requirement when the final bill is passed into law.

 

[samclem]

If part of the bill's purpose is to encourage behavior, why dilute it by rewarding those already following said behavior?

Apparently the goal is to get people to trade in lower MPG vehicles for those with better MPG. As you note, the goal is not to encourage people to buy cars with higher MPG.

I wonder why I/we are analyzing this as though it has some rational purpose that can be identified by looking at the result. This is, after all, (proposed) legislation. It would be like trying to identify the higher thoughts of a pig by looking at a sausage.

As for buying a clunker, you would need to buy the clunker and drive it for a year, then you would be eligable.

The linked article didn't say the vehicle had to be registered for a year to the present owner.

It's time to buy up some clunkers on speculation hoping that this bad legislation passes. Buy some out of the junkyard, register them, and get the one-year clock started. My state doesn't actually check a registered vehicle to see if it runs.

 

[FUEGO]

I saw a discussion thread on a different forum suggesting that this could be a triple play: $4500 trade in credit plus sales tax credit plus hybrid/electric vehicle credit.

 

[FUEGO]

I wonder if I could go down to the friendly neighborhood scrap metals dealer and buy a nice chassis and pay by the hundredweight for it. Does it have to have tires still attached?

 

[TromboneAl]

Here's the bill:

http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.2751:

Excerpt:

...the eligible trade-in vehicle is a category 2 truck and the combined fuel economy value of the new fuel efficient automobile is at least 1 mile per gallon higher than the combined fuel economy value of the eligible trade-in vehicle; or...

1 MPG difference. La di frickin da.

 

[Texas Proud]

No multiple vehicles...

"(B) NUMBER OF VOUCHERS PER PERSON AND PER TRADE-IN VEHICLE- Not more than 1 voucher may be issued for a single person and not more than 1 voucher may be issued for the joint registered owners of a single eligible trade-in vehicle.

(C) NO COMBINATION OF VOUCHERS- Only 1 voucher issued under the Program may be applied toward the purchase or qualifying lease of a single new fuel efficient automobile."


And you would have to own it for the full year...

• • "(7) the term `eligible trade-in vehicle' means an automobile or a work truck (as such terms are defined in section 32901(a) of title 49, United States Code) that, at the time it is presented for trade-in under this Act--

• • • (A) is in drivable condition;

• • • (B) has been continuously insured consistent with the applicable State law and registered to the same owner for a period of not less than 1 year immediately prior to such trade-in;

• • • (C) was manufactured in model year 1984 or later; and

• • • (D) in the case of an automobile, has a combined fuel economy value of 18 miles per gallon or less;"

 

[Texas Proud]

Just looked at the value of my car.... and for trade in it is $1,000 to $1,500... which means they would offer $800...

SOOOO, maybe I will get a bit of stimulus out of this plan...

 

[FUEGO]

hehehehe, just checked cars.com. Still plenty of decade old ford cars for sale right around $1000.

 

[John Galt III]

John, from what I have heard, the money goes directly to the dealer.
I am not sure if the dealers will discount the rebate up front, or pass it along once they get it.

Let's say Hyundai dealer is offering $2,000 discount from Hyundai, and $500 discount from dealer, total discount is $2,500. Eager new car car-buyer with clunker shows up and expects discount of $2,500 from industry plus $4,500 from taxpayers totalling $7,000 but dealer says "Oh no, you only get the $4,500 discount. Don't be greedy", and Hyundai and the dealer save the $2,000 and the $500 discounts. Businesses win, clunker owner wins (somewhat) and taxpayers take the hit. Sounds about right.

I've been reading about "vouchers" being issued to the buyer, for $4,500.

 

[TromboneAl]

You've got to own it for a year, and the legislation lasts for only a year, so if you're going buy one for trade in, you have to do it before the law is enacted.

 

[FUEGO]

Let's say Hyundai dealer is offering $2,000 discount from Hyundai, and $500 discount from dealer, total discount is $2,500. Eager new car car-buyer with clunker shows up and expects discount of $2,500 from industry plus $4,500 from taxpayers totalling $7,000 but dealer says "Oh no, you only get the $4,500 discount. Don't be greedy", and Hyundai and the dealer save the $2,000 and the $500 discounts. Businesses win, clunker owner wins (somewhat) and taxpayers take the hit. Sounds about right.

There is language in the law to essentially disallow dealers to charge additional fees for those using the vouchers.

See section (c)(1)(F):
"NO ADDITIONAL FEES- A dealer participating in the program may not charge a person purchasing or leasing a new fuel efficient automobile any additional fees associated with the use of a voucher under the Program."

Violation of the act carries a $15,000 civil penalty.

I'd use the ambush tactic: negotiate the price, get the final papers out for signature, then say oh, by the way, I'd like to trade in this clunker and get that $4,500 credit applied to the purchase price while I'm at it.

On a different note, I have entered negotiations to buy a 1986 station wagon from my parents that gets 17 mpg. And runs. The 2009 honda civic (the likely new car) gets 29 mpg. Sweet! May have to pick up another clunker for my wife so she can get a new car too for ~$3500 off. Good ole uncle sam's generosity.

 

[FUEGO]

One provision that concerns me is that the car must be in operational condition at the time you trade it in. So if I buy a car for a year and a day, I would have to make sure it still runs when I try to trade it in. Not sure if that means it actually has to pass emissions inspections and safety inspections...

 

[samclem]

There is language in the law to essentially disallow dealers to charge additional fees for those using the vouchers.

See section (c)(1)(F):
"NO ADDITIONAL FEES- A dealer participating in the program may not charge a person purchasing or leasing a new fuel efficient automobile any additional fees associated with the use of a voucher under the Program."

Violation of the act carries a $15,000 civil penalty.

I'd use the ambush tactic: negotiate the price, get the final papers out for signature, then say oh, by the way, I'd like to trade in this clunker and get that $4,500 credit applied to the purchase price while I'm at it.

On a different note, I have entered negotiations to buy a 1986 station wagon from my parents that gets 17 mpg. And runs. The 2009 honda civic (the likely new car) gets 29 mpg. Sweet! May have to pick up another clunker for my wife so she can get a new car too for ~$3500 off. Good ole uncle sam's generosity.

I'd wait until we see what finally emerges.

And that "No additional fees" language is a hoot. Have these legislators never bought a car? How is a customer going to know if he was charged an "extra fee?" Even if a customer waits until the end to ambush the dealer, he could suddenly discover that the car the customer wanted was "just sold by another salesman," but luckily he has another, even nicer car, with some special undercoating and much nicer wheels. "With your rebate for the clunker, you're still saving a lot of money and getting a better car."

 

[samclem]

One provision that concerns me is that the car must be in operational condition at the time you trade it in. So if I buy a car for a year and a day, I would have to make sure it still runs when I try to trade it in. Not sure if that means it actually has to pass emissions inspections and safety inspections...

Who is supposed to check that the trade-in runs? The dealer? If so, I wouldn't worry--they'll sign a paper saying it was running when you coasted it into their lot if that's what it takes to get the $$ from Uncle Sam.

 

[growing_older]

Meanwhile, whatever new car sales would have been made to folks who own older cars that may or may not fit this clunker definition have stopped entirely as people wait to find out the rules. If they meant to stimulate new car sales, causing a drop to near zero sales while they work out the details may be an unexpected side effect.