Cash for Clunkers...the truth.

bmgcya · Post by **bmgcya** » Fri Sep 25, 2009 9:21 am

Here's what an accountant friend had to say about "CASH FOR CLUNKERS".

Ignore all the gas crap and just look at how the stupid car buyer got taken to the cleaners:

If you traded in a clunker worth $3500, you get $4500 off for an apparent "savings" of $1000.

However, you have to pay taxes on the $4500 come April 15th (something that no auto dealer will tell you). If you are in the 30% tax bracket, you will pay $1350 on that $4500.

So, rather than save $1000, you actually pay an extra $350 to the feds. In addition, you traded in a car that was most likely paid for. Now you have 4 or 5 years of payments on a car that you did not need, that was costing you less to run than the payments that you will now be making.

But wait, it gets even better: you also got ripped off by the dealer.

For example, every dealer here in LA was selling the Ford Focus with all the goodies including A/C, auto transmission, power windows, etc for $12,500 the month before the "cash for clunkers" program started.

When "cash for clunkers" came along, they stopped discounting them and instead sold them at the list price of $15,500. So, you paid $3000 more than you would have the month before. (Honda, Toyota, and Kia played the same list price game that Ford and Chevy did).

So lets do the final tally here:

You traded in a car worth: $3500

You got a discount of: $4500

---------

Net so far +$1000

But you have to pay: $1350 in taxes on the $4500

--------

Net so far: -$350

And you paid: $3000 more than the car was selling for the month before

----------

Net -$3350

We could also add in the additional taxes (sales tax, state tax, etc.) on the extra $3000 that you paid for the car, along with the 5 years of interest on the car loan but lets just stop here.

So who actually made out on the deal? The feds collected taxes on the car along with taxes on the $4500 they "gave" you. The car dealers made an extra $3000 or more on every car they sold along with the kickbacks from the manufacturers and the loan companies. The manufacturers got to dump lots of cars they could not give away the month before. And the poor stupid consumer got saddled with even more debt that they cannot afford.

Obama and his band of merry men convinced Joe consumer that he was getting $4500 in "free" money from the "government" when in fact Joe was giving away his $3500 car and paying an additional $3350 for the privilege.

U-Turn · Post by **U-Turn** » Fri Sep 25, 2009 10:40 am

Are YOU paying 30% in income taxes ?
WHEN I was working, and even taking in profits from Capital Gains, the most I paid was 18%.
Last year, no Capital Gains I paid 14%

What a bunch of BS.

Post by **DarcShadow** » Fri Sep 25, 2009 10:54 am

The Cash for Clunkers wasn't a deal and any one that didn't see it was blind.

Unfortunally, most people are in fact blind when it comes to money and making sense of every thing.

Also, the program didn't fix anything, and possibly made things worse. Sure it boosted car sales now, but that only temp, and come 2 or 3 months down the road when every one that wanted one has a new car, new car sales are going to hit the floor like a dead cat.

Every one needs to come to terms that we can not live in a disposable world and that things like cars are bought and kept for several years. Part of the problem that the car companies got into was due to consumers. Consumers were buying and trading new cars well before the life of the car was used. This drove the manufacture to ramp up production to keep up with the demand for new cars but the demand wasn't a real need, just a want or desire. Now that people are buying cars more out of need and not just desire the car compaines have way to high production numbers.

Had consumers been more sensable, and car companies not ramped up production to make extra profit the industry wouldn't be in the mess it is now.

U-Turn · Post by **U-Turn** » Fri Sep 25, 2009 11:47 am

I agree, it didnâ€™t fix anything but kept product moving off of the storage lots, off of the showroom, keeping some people and companies/business afloat. (I am thinking of manufacturers and dealerships.)
We live in a disposable world and I agree that cannot continue indefinitely. Recycling programs require effort on the individual. Car recycling currently consists of scrap metal or used parts, to keep clunkers on the road for another few years.
GM had an idea, make a car in pretty much 2 major parts, the drive train/suspension, and the body. I thought that would be pretty much 99% recyclable. Wonder whatever happened to that project.

Blizzard_1708 · Post by **Blizzard_1708** » Sat Sep 26, 2009 4:42 pm

Clunker cars also had to be disposed of, and could not be re-sold so perfectly good working cars were made to stop working so they could go to the dumps

Firewa11 · Post by **Firewa11** » Sun Sep 27, 2009 9:44 am

Kinda long and boring, so skip forward to see progress. The engines had to be disabled with 'liquid glass' replacing the oil, and run until the thing seized up. Complete waste, considering the engine is worth the most in salvage.