Cash for Clunker envy
Posted on July 28th, 2009 – 11:30 AMBy Kara McGuire
I recently wrote a column about how my husband’s 1992 Toyota Camry is on its last legs. The photo posted with the story cracks me up because the shot was intended to show how the key is stuck in the ignition. But instead it just highlights how we’re total slobs. Thank god you can’t whiff the indescribable-but-I’ll-try motor oil/grease/hot Goldfish crackers smell too!
To recap. The car has a lot of problems, but it still runs. And it does not qualify for Cash for Clunkers. And its trade-in or charitable value is laughable.
I thought writing the column would help me to retire the household topic of whether we should buy a car now (answer: No) . But all of this cash for clunker talk makes me envious.
Part of me wants to join the new car party. I know it’s expensive. I know my car can run longer. I know I can buy used. But buying a new car would help the economy. There are good deals out there. And frankly, we can afford it if we want to, Cash for Clunkers or not. It’s all a matter of priorities.
Our 2003 Ford Windstar with 93,000 miles on it does qualify for the program. The $3,500 government dough plus a $1,500 cash rebate and a discount I get because my father used to work for Ford would equal a pretty good deal on the Ford Flex, the grocery getter I think we’d buy to haul around the three kids and the pop-up camper. I’m all for fuel efficiency, but you try fitting three car seats in a Focus.
So I played around on the Ford web site and got a quote. Picked up the phone to call Mr. Kablog. His response? “$20,000 is $20,000.”
How true.
Yes, it’s a good time to buy a car. But cars are expensive, even if you qualify for the rebates and incentives.
In the next weeks as Cash for Clunkers is in the news, I’ll try to think of Jason each time I have the urge to head to the dealer’s lot. He sent me the following email:
My clunker is a 1999 Grand Caravan. It has 140,000 miles on it. The value is $2,000 because it is in poor condition – lots of body rust. The Caravan is list at 18 MPG so I would qualify for the $4,500 cash for clunkers incentive.
Originally I wanted use the cash for clunkers to get a small high MPG car. However after much consideration I decided not to.
The Caravan should last another two years (another 15,000 to 20,000 miles). Based on the current economic situation and uncertain job market I decided to wait until the car dies and tow it to the junk yard.
Readers, any of you planning on taking advantage of CARS? If so, what made you pull the trigger? Any trouble finding a vehicle?
If you are considering a new car, check out this tip sheet from Americans Well-Informed on Auto Retailing Economics.
I’ll keep you posted on my car-waffling. As you know, it’s often the behavioral/psychological aspects of finance that trip us up. And my heart might just overrule my head on this one.
38 Responses to "Cash for Clunker envy"
Kara, Kara, Kara!
I simply can not imagine buying a brand new car. I don’t think I could ever bring myself to do it. That hit you take when you drive it off the lot…ouch! I’ve always bought used. Before I had a family, I splurged on a Toyota Camry that was new enough to still have warranty left on it, and that cost nearly as much as a brand new domestic, but it was worth it.
I haven’t even looked at the cash for clunkers program because even though we’re driving a 92 Camry now (my 2001 died an untimely death at 150,000 miles - it really should have gone another 100,000…) with 295,000 miles on it, it runs, it serves its purpose, and we just can’t think about another car payment right now.
If I were in the market, though, I would in a heartbeat go back to Poquet Auto. They are a great, family run used car dealership that focus strictly on single-owner late-model cars. Most still have warranty on them, all are in great shape, clear titles, they’ll put on new tires for you, they don’t mess around with prices - they are fair, below KBB dealership prices, and they are honest. Everyone I know who has dealt with them has been happy.
I would never buy a new car, ever. It makes zero financial sense.
I bought my 1996 Toyota Corolla two years ago for $1,900 cash (I’ve paid cash for all of the cars I’ve owned). Still runs just fine. That’s less than $1,000 per year so far, and with few repairs and no major ones on the horizon, that per year capital cost will just keep going down. Even if your $20,000 car lasts for 10 years, that’s still twice what I am paying per year in capital costs, and that doesn’t cover maintenance or repairs.
I may buy a three- or four-year-old car one of these days, if I have the cash and need a decent car to last a long time, but for now, my old beat up car works more than well enough for me.
Actually, when I saw the photo in the Strib, I was secretly hoping someone would make you a super great offer on your car. 
I can relate to that pull of trying to decide to buy a new car or not. We had a 2006 Ford Focus wagon that we bought brand new for my husband’s commuter car. (Big mistake - it depreciated fast!). It got great mileage, but wasn’t much fun to drive…. especially in the winter. It didn’t have anti-lock brakes or side air bags. And it didn’t fit all the car seats, meaning we couldn’t use it as a family car backup if our minivan broke down.
We decided we wanted a Ford Escape (small all-wheel drive SUV). Badly. But we couldn’t justify the purchase since the Focus was still pretty new and trading to the SUV would mean WORSE gas mileage.
We debated for about six months… then I saw an Escape at a great price and we opted to make the move. We only ended up paying $10,000 out of pocket (we paid cash - WOOT!) for a 2008 Ford Escape with 17,000 miles on it. And we LOVE driving it.
Was it the best decision we could make with our money? No. But sometimes safety and comfort wins out.
Yeah, buying a new car never makes any sense. Unless somebody was willing to give $4500, which is probably greater than the value you will lose when the car becomes “used” instead of new. My three year old car has lost less than $4500 in value since I bought it. You could probably drive a new Civic, Focus, etc for two or three years without losing any money to depreciation. The government is willing to cover between 33% and 50% of the purchase price of a cheaper economy car. Thats a great deal, much better than what you would get for a slightly used model which doesn’t qualify for the credit. If you have the ability to take advantage of this program, you probably should. Unfortunately, most of us who are smart enough to realize this probably were smart enough not to be driving around in cars that get less than 18mph.
One thing I think that’s missed in this old car v. new car question is this: It costs quite a bit of money to keep an old car running.
Maybe it doesn’t cost nearly as much as a car payment, of course. But think about this: I drive a 99 Honda Civic. It’s a good car. I’ve changed the oil and kept up with the routine maintenance and drove the car easily.
Nevertheless, I recently had to drop $1,000 to fix my steering that was decidedly not routine. That’s three months worth of car payments. Soon I’ll have to get a new set of tires (routine, yes, but you don’t have to do that to a new car). And that’s another car payment. I’m also going to have to replace the timing belt. One more car payment — and then some. By my count that’s five car payments.
True, we haven’t had that kind of spending with this car in some time. But the longer you go with an old car, the more those repairs come up, both routine and non-routine.
I’m personally not planning to buy a new car at this point, or any point soon. I’m just saying that at some point down the line keeping an old car running becomes more expensive than it’s worth — because you’re pouring money into a car that has little value and could break down for good at any moment.
As I’d also like to see some quantification of the alleged new car value — especially when compared with the prices of late-model used cars at the dealership. I tend to think that’s a little overstated, but I can be convinced otherwise.
P.S.: To answer your question, I have no plans to buy a new car, or a late-model used one, anytime soon.
JDM: That’s my issue. I haven’t had to put big money into my van - yet. But my guess is that will change in the next couple of years.
And we’ve put $1500 into the Camry in the past two years and I don’t want to spend a penny more.
I think buying a new car is the only way to go. And it’s the smartest move financially. But only with one catch, you need to keep the car until it dies.
The old line about the car depreciating thousands once you drive it off the lot is irrelevant if you’re going to keep it until it’s a junker.
But buying a used car with 15,000, 20,000, 30,000 miles is a car you didn’t get that 15,000, 20,000 or 30,000 miles worth of service out of. And it’s 15,000, 20,000 or 30,000 miles closer to repairs.
Yes, my husband and I are taking advantage of CARS — we’re cashing in on a 1991 Ford Explorer — in exchange for a 2010 Kia Soul
Yup…we are buying. My 2000 Suv qualifies for a $3500 rebate. Jeep is doubling the offer, and since we can deduct the sales tax next year, we are paying less for new than we would pay for used! Beats keeping the klunker and continuing to pour cash into fixing. For us, it is a great deal!
I too am envious of this program. But to me it has flaws in the system. Like Kara’s husband I drive a 94 Toyota Celica, 31mpg, and still in good shape with no major problems. Well expect one, because my car gets good gas mileage I do not qualify for the rebates. From my point of view shouldn’t most everyone with a car old than say 12 years old recieve this incentive. I would like to buy a new car and help the economy but this loop hole means I will most likely just hang on until it dies and then buy another used car. So much for stimulating the economy. Thank you elected officals.
People buy new cars because it makes sense for them to do so. I have bought many new cars, drive them 5 years and dump them. I work a lot and have no choice. I cannot spend time fixing junk or going to repair shops. I am more than willing to spend 3-4 K a year to drive around virtually worry free. P.S. neither of my cars qualify for the clunkers program, and I don’t care.
My last two cars were 5 years old at time of purchase, both had about 60,000 on them, and both were $4000-4500 (one sedan, one minivan). I’ve had one for 3 years and the other for 2 years. And both will last at least another 5 years. Far better deal than a new car, and I’ve had new cars. $8000-$9000 gets you about 2 years of car payments on 1 new car. I’ve had two cars for that price + what I’ve spent in repairs (nothing major), but don’t have to pay another 3 years of payments!
PS to JDM - new tire purchases must happen for all cars new or used, if you keep them for awhile. This shouldn’t be taken into account in your calculation.
I also am the owner of a “clunker” that I’d like to get rid of. My 99 Grand Am has 132K, is cheap to insure, and has tires that’ll go another 40K. Problem, it’s not particularly comfortable for the family to ride in. Plus it doesn’t qualify for the incentives (22mpg).
I think the idea behind the program is good, but it should include a broader spectrum of older vehicles. We can afford a new car - but if we’re not going to get anything for the old one by trading or selling it outright - we’re better off holding on until it demands we make a move. They could’ve broadened it by allowing any car 10 years old or more for the $3500 rebate as long as you purchase new with the same or better mileage. We’d go for that in a heartbeat. Mr. Minivan could stay in the garage at 17mpg on weekends while we drive the newer, more effecient vehicle.
“But buying a new car would help the economy.”
Someone correct me if I’m wrong, but wouldn’t buying a used car help the economy, too? Just because you’re not spending $20K at a dealership doesn’t mean you’re not adding money to the economy. In fact, it could be argued that spending $12K on a used vehicle does more for the local economy than buying new, because the majority of the purchase price of a new vehicle goes back to the manufacturer, whereas the majority of the purchase price of a used vehicle generally goes to the seller.
I agree. I think a husband and wife with a kid or kids should have at least one newer reliable vehicle. I don’t believe in having 2 car payments at one time. We finished making payments on one vehicle before replacing the other.
I am unsure if I am stating anything new but it seems to me that if you have a car such as mine that is in the shape it needs to be to qualify then you probably dont have the money to afford a new car in the first place…. Most people that can afford a new car simply buys one. How about something that will work for people like me that have a car that is falling apart, no longer gets good gas milage and is broke.
I purchased a new Saturn Vue over the weekend using Cash for clunkers program. Why? A few reasons. First though, I should mention NOT a new car person. I think its a rip off compared to buying used- period. Why pay for depreciating asset??
We owned a 1995 Chevy Blazer with 180k on it. Has been a great car for us, but in the last 2.5 years, put in $4000 into it and it become less and less dependable. Every 3-6 months, there was a $600 fix needed somewhere. Its fuel pump went out the day after the Cash For Clunkers program was first passed. So, I looked into used and new options.
The new option was a Saturn Vue (which Ive admired from afar since it came out redesigned for 2008). The used option was a 2006 Ford Escape (3 yr old car, which is the sweet spot for buying a used car given depreciation curve)Both of these are comparable replacements to our use of the Blazer.
So what made me buy the new car? The combination of Mult discounts!!
My brother works for GM (GMS ~$2700 discount), there were good incentives on the Vue ($2750)and throw in a $4000 $ for clunker voucher and we’re talking $9,000 off a new vehicle.
This combo of discounts started to level the playing field when comparing to a used vehicle purchase. When compared to the used Ford Escape $14,000 price, The new (loaded) Vue was ~100 more a month than the Escape. That ~$100 got us a new vehicle with options we wanted, a warranty, and a car we intend to drive for 10 years. The used Escape while very decent, would likely have been something we’d drive for a few years and probably sell or trade given it wasn’t exactly what we wanted and already had 3 years on it.
The Cash for clunkers program in addition to the other GMS discount and incentives created a one time exception for us in buying a new car. It definitely put us over the edge for what would otherwise have been a no brainer used car search/replacement for our Blazer.
New vs Used…
I’ve been a big fan of buying cars that are a couple years used, but if you look at pricing right now, I have gotten quotes on NEW that are close if not equal to prices on cars with 30k miles on them.
Do a little research and a lot of negotiating, and I pay less for new than some of you people buy used.
I had a 1993 Chev pick up with 313,000 miles. I bought it new for around $17,000.00. I just turned it in for 4,500.00 cash for clunkers. So 17,000.00 subtract the 4,500.00 is 12,500.00 divided over 16 years is 782.00 per year I think that was some good cheap transportation and I enjoyed it while it was new.Yes I bought some tires and batteries,etc You do that when you buy used as well. I miss my truck, but I do like taking my new Cobalt to the gas pump much better.
Well in terms of whether or not its necesary that is a debate that will rage for a long time. My situation is not one of choice but one of requirement. On july 19th at 2:45 am someone totlaled my car. I now need a car and its not like i have time to shop or money saved up to throw at the problem. I wish i could have used my car for cash for clunkers but alas no. As it is i’m looking into a 2000 camry but that is partially a pipedream. So buy new or not just be glad you’re not standing where I am. up a certain creek without a paddle.
A friend of mine just bought a new car yesterday using the CARS program. He told me that a few of dealers were claiming that they’d heard the money might run out within a week (basically a ploy to pressure you into buying now.) If the program was that successful the gov. will put more money into it. Also a few tried the bait and switch where they claimed they had certain economy cars in ads and on TV at great prices and of course once he got there those cars were gone but they have a more expensive one you can check out. And surprise, surprise the new cars were more money then they were just before the CARS program went into effect because the demand was not there and now with demand up there is less supply at some dealers. Long story short cars dealers are cars dealers so watch your pocket book and do your homework and don’t feel pressured, you can always walk away. They need your biz more way more then you need there’s.
I have 2 cars: an 08 Mustang (bought new 2 months ago, and I’m so glad I did) and a 93 Explorer. I didn’t trade in the Explorer just out of the fact that I wouldn’t get much for it. The CARS program has definitely peaked my interest, so I’m looking more and more at it. My only worry is do I really want to add on another $200 car payment, or do I ride out the Explorer for winter driving as long as I can? Will it last even 1 year longer?
I am waiting until October or Nov to see how desparate the dealerships are to get rid of their inventory. If I remember correctly, the newer models (I guess 2011) will start to creep out, and the dealers will give more discounts for the “older” models. I bought my 08 right as the 2010 ’stangs were coming out, and the deal took $2000 off, on top of the $4000 or so that I was getting already. Definitely saved me some money, and it’s definitely been worth it so far (we’ll wait til winter with my Exploder…)
Dane, the dealer are not lying, the money from the govt is limited and will run out now. BTW, we tried to purchase from one auto dealer who refused to sell us the car since they had too many orders, and many of those who thought they qualified did not (klunker not paid for in full) We did find a new car at another lot, got a great deal (new 4WD auto SUV for $13020 - actually less than this when we deduct sales tax next yr) paid cash and are picking up our new car today!
A feeble attempt at trying to stimulate the economy and save an industry. It should have been written so that people get the credit when they deliver their clunker to the junk-yard and then you could spend your $$ anywhere. Takes the clunkers off the road, promotes “green” thinking (like walking, car pooling, etc.), and would have made the dealerships come up with interesting promotions where they would drag your car to the yard on your behalf.
I know it was argued amongst our elected officials for quite some time, but the outcome just will not deliver what they hoped…
I signed the deal for a new car at one of the local Toyota dealers yesterday, and 24 hours later they still haven’t gotten approval on of the clunker deals from the cars.gov program. Has anyone locally purchased a car and had their clunkers deal approved by the feds yet?
We are undergoing a VERY painful process of trying to negotiate w/dealers via email, to nail down a decent “summer sale/before the 2010s come out” price before we even tell them we have a qualifying (3500) CFC vehicle.
In anticipation of this golden moment (ironic smile), we’ve been shopping & emailing & test driving & putting up w/dealer sales peoples’ oh so special pointless phone calls.
Result? Not one of the dealers has come down in price beyond $250.
Now, we understand the CFC program was NOT intended to help us poor slob consumers, but to cheer up the dealers who get–yup–MORE FREE GOVERNMENT MONEY FOR DOING ABSOLUTELY NOTHING BUT SCREWING THE CONSUMERS!!!
Makes us feel so special.
But here is the kicker. We HAVE to buy another car, as we can barely kick start the ole Transport to get it running w/out a jump every other day, and I go back to work in a matter of weeks. Plus, we’re moving this week.
We have never owned new (spit), and I don’t want to own new, but the way the dealers are currently pricing the recent year used cars SO HIGH, a lot of us feel forced into the deal, begrudgingly, because of the discount for the CFC that is worth $200 at the junk yard.
Now, the problem is, there are no true “sale prices” that the dealers are giving, with or without the clunkers deals.
So, here is my take. Yes, this will be the one and only new car we will ever own, just to spite the greedy, sleazy b@*tards. We will drive this new car until it dies, like we do with all our cars. EX: the old 88 Ford Waldoch conversion van w/+350,000 mi on it last winter (still running) junked for $250.
We are so aggravated w/the bull-oney sales tactics these sleazy jerks use to try and wear you down to take what they want to sell you instead of selling you what you want to buy, that we may sell our junker to somebody a bit poorer than us (we bought from our mechanic in excellent shape, so it could be nursed along if someone actually put a bit of money into it), and go buy used.
Then send pics of us standing proudly next to our newer used car to all the dealers/sales jerks, smiling & giving them a flying middle finger salute with a caption that says:
TOO BAD, YOU GREEDY…???
OK, fantasy off.
Seriously though, we just feel so lucky the government is helping the dealers screw us.
Good luck to anybody who has to go through this god awful process. It’s helluva bargain–slit your throat in frustrated agony of getting screwed, or shake hands with the devil, bend over, and smile.
Then thank them profusely for “the deal.”
I’ve never bought a new car, but can’t pass up a deal; so I just bought a new Nissan cube. I was going to buy cheaper car, but ended up spending $14,000 after all was said and done. I guess I’m going broke saving money.
I really do believe that the money will be gone by the end of the week at the latest. They are really selling a lot of cars. I wouldn’t be surprised if the money is gone by tomorrow. That’s how busy they are.
Hi Fred,
I am in the same position as you.
I have a ‘98 Dodge Dakota that fits very nicely into this program. (16 MPG, and I have owned/insured the vehicle since then).
I bought a new car on Monday,
(actually had all the paperwork done a week earlier), but the dealer (Burnsville Toyota) won’t release the new car until they get verification from the Feds that my submission was accepted.
They submitted my data about noon on Monday. Still no word here either.
Has ANYONE here gotten word that their submission was actually accepted by the Feds yet?
I was going to take advantage of the program - But all the quality manufacturers stopped their incentives for 2009 cars when the program started, and I decided not to. 2009’s are a year old when the 2010 models come out in a month. And, without the incentives I would paying as much for a 2009 as a 2010, and would be giving away my truck and getting nothing in return. The incentives easily covered the difference between what I could sell my truck for and what I would get via the program. Sure GM still has their incentives, but I own one and would never buy another. They still don’t know how to build transmissions or steering components.
We gave up our 1997 Taurus SHO (V8). It had some engine problems that had us concerned anyway. We bought a Ford Focus SES with a manual transmission. Adding together the Clunker rebate, the Ford rebate, and the dealer discount came to $8400 off the new car. Our new car cost $9800! We bought the extended warranty and a windshield treatment. Both of these companies benefit from the Clunker program too. And let’s not forget the junkyards that will get to sell parts from our Clunkers. Our college student daughter drives this car. We’re relieved to not have to worry about the engine blowing and leaving her stranded.
Re: Ford Flex, the grocery getter I think we’d buy to haul around the three kids and the pop-up camper. I’m all for fuel efficiency, but you try fitting three car seats in a Focus.
The Ford Flex is rated at 19 mpg. My understanding is that this vehicle does not qualify. You need to hit the magic number of 22, if I am correct, based on your trade-in. Assuming your camper weighs less than 3,500 pounds, the FWD Toyota RAV4 w/ 6 cylinder would qualify and could pull the camper with ease. The closest thing, although much smaller, that Ford makes is the Escape. Similarly equipped (V6, FWD), it comes up 1 mpg short of qualifying.
Program runs through Nov 1, 2009 or when the funds are exhausted, whichever comes first.
Henry
Blogger
http://www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info
Droppin’ in: I also thought that the Flex would not qualify and was 19mpg, but if you go to Ford.com and use its Let Ford Recycle My Ride calculator, my 2003 Windstar could be traded in for a $3,500 credit and a Flex, which suddenly gets 20 mpg. My guess is the fuel economy for the 2010 model improved by 1 mpg.
I believe the Flex is considered a Category 1 Truck and for that classification you only need an improvement of 2mpg.
It seems like there is still some contradictory information out there. It will be interesting to see how many of the transactions in the pipeline are approved.
my ‘93 Accord with 180k doesn’t qualify but I wasn’t planning to get rid of it as it still runs great. “Need” a 3rd car in the house and was looking at recent used for the wife and hand her car down to the kid but I think I’ll wait until the cocaine of free $ is gone and the dealers are again begging for customers in a couple months.
Just found out my energy efficient car with 139K miles doesnt qualify, but I read the article on 7/29/09 and was upset by the comments on page A7…The purpose of the government car rebate program is to entice money-motivated Americans to use more energy efficient trucks and cars, stimulate the automobile industry, and provide an incremental benefit to the longer term effort to slow global warming and ecological destruction. Unlike the fellow in the article who “held his nose at a government program”, ethical and patriotic Americans have already for decades been doing their part to slow global warming and energy waste by bicycling, buying energy efficient cars and making wiser lifestyle choices.
The fellow in the article who “held his nose at a government program” is disgusting and doesn’t deserve to be an American. He is wrong about his measly taxes being any part of this program- his taxes along with his republican votes went to subsidize the wealthy under Reagan, prevent regulation on polluting industries and to build torture facilities under Cheney. It is my taxes and my vote that are providing him a benefit because Obama wants to be president for all americans - morons and intelligent ones alike.
Thank goodness they are now suspending this idiotic program…who needs a new car and why should my kids and their kids be the ones to subsidize this? People should buy the cars they can afford after saving for their own future and kids future…
These programs have worked to in other countries to help stimulate the economy. Your kids or their kids won’t be subsidizing anything if the economy doesn’t allow them an opportunity to work. Its not the one way street that you picture. I bought a new car three months ago - no not cause I needed it but I wanted it and after maxing out my retirement savings and emergency savings - I could AFFORD it! Its all personal choice and preference.
Many cars won’t qualify for a voucher because of all the C4C requirements. Those people can get a tax deduction by donating a car to charity. Car donation is also a great way to help a charity.
