Cash for clunkers, sickening

[Venturous Randy]

Today after work, I stopped by one of the local salvage yards to see if they had a window roll up for Laura's van. I was told that now they have a new yard with Cash for clunkers vehicles in it and they should have plenty. I went in and saw at least 200+ vehicles and to be honest, it looked like a pretty nice car lot. In fact, there were a lot of cars and trucks that I would be proud to own. There was an 02 Burgundy Escalade in very nice shape, a two door Seville with a Northstar engine, several Blazer SUV's that looked almost new and on and on and on. It was absolutely unbelievable that many of these vehicles were not worth more than $4,500 for a straight trade-in or private sell.

They are now selling parts off them, but no engine parts. But, with "disabled" written across the windshield, the engines are worthless, since they have been seized up.

I know several people that are in great need of a decent vehicle and it is truly a shame at what has happened to these vehicles. Yeah, there are some that are truly clunkers, but many were really nice.

RandyA

[Flyinfool]

Ya a lot of nice stuff traded in.

I didn't think of it till it was to late, my buddy traded in his truck, same as mine but 2 years newer and 150K less miles, we could have traded trucks first.

[JerryK]

No you couldn't have traded trucks first..............had to be in your name and titled,insured and licenced for 1 year with proof........if not anyone could have bought a $500 junker and got $4500 for it.....loop holes were covered.

:Venture:JerryK 30 year Chevy sales

[BigBoyinMS]

You're exactly right. I had to stop paying attention to the the CFC lot after some of the vehicles that I saw coming in. I saw a couple of late '80's Chevy 1/2 tons both with less than 70k miles and straight as an arrow. There was '04 Trailblazer with low miles that needed a paint job.

The other lots around town had even nicer ones.

 

Does anyone remember in the 80's California had a similar program where people would bring in old "polluters" and they would pay them a few bucks to let them crush them? One of the magazines (Car Craft or Hot Rod, I think) actually intercepted someone trying to turn in a clean late 60's Camaro. They bought it and turned it into a project car. When it was done they tested it and the emissions were better than most stock vehicles.

[Monty]

I thought the cash for clunkers vehicles were supposed to be crushed as part of the deal?

[McBrush]

This was sent to me earlier today, just passing it along...I have no idea how accurate it is.

 

SO..you took FEDZILLA up on its offer of $4500. dollars to trade in your old "Clunker" (interesting choice of words)? Well, let's see who got the best of that "deal"...

If you traded in a clunker worth $3500, you got $4500 off for an apparent "savings" of $1000. You could have gotten $3,500 if you had just traded the car in. So you really are $1,000 ahead

(depending on your clunker's value)

at this point. Not too bad...

 

However, you WILL 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 will 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, trading in a "clunker" that was costing you less to run

than the payments that you will now be making..

Even if you save $1,000. d ollars a year in gas due to better mileage, you're still gonna be

in the red

for five years....hello?

 

But wait, it gets even better: you also got ripped off by the dealer. For example, the month before the "cash for clunkers" program started,

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. because competition was stiff due to poor sales from the stalled economy.

 

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. Now let's do the math....

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

(that's minus...in the red)

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

----------

Net Loss:

-$3350

 

We could also add in the additional taxes

(sales tax, state tax, dealer prep, etc.)

on the extra $3000 that you paid for the car, along with the

Five years of interest

on the car loan; but let's just stop here while you kick yourself.

Suffice it to say that those costs will be much higher than any savings you get from "better mileage".

 

So who actually made out on the deal? FEDZILLA collected

taxes

on the car along with

taxes

on the $4500 they "gave" you. The car dealers made an extra $3000 or more on eve ry car they sold along with the kickbacks from the manufacturers and the loan companies. Manufacturers got to dump lots of cars they could not give away the month before. Lots of good or repairable used cars got taken off the market, crushed and sold as scrap metal to

(ready for this?)

CHINA !

(Look it up...)

And the poor consumer got saddled with even more debt that they cannot afford.

 

FEDZILLA'S merry men

(who promised that people making less than $250,000.. would pay "not one red cent more in taxes")

will make millions in new tax revenues after convincing Joe Consumer that he was getting $4500 in "free" money from the "government" In fact, Joe was giving away his $3500 car and paying an

additional

$3350 for the privilege. Chicago politics gone global...with an agenda.

 

If you find errors in this math, please let me know...being a simple guy, I'm always willing to learn new things; and if you took "advantage" of the Clunkers deal, I have some swamp land down in Florida that's for sale...

 

[silverdeer0454]

My Dad had two stretch limos. He tried to sell one of them for $2500 and after 3 months "No Takers" he used it as a trade in for a new Chevy Aveo for my mom. Here's one of his cars. This one he kept. The other had a transmission problem and a bit of rust. Shame of it was they had to crush it.

I understand what McBrush posted, (he got it from someone else) however not every dealership played that game, at least not the one my Dad dealt with. He left the dealership with a brand new American made car, loaded for just over $6000.

 

 

Edited October 7, 2009 by silverdeer0454
gave credit to the wrong person...oops!

[LilBeaver]

I thought the cash for clunkers vehicles were supposed to be crushed as part of the deal?

 

They were supposed to be crushed and completely destroyed, melted down, whatever - not used for anything including scrapyard parts.

 

BUT, one of the big problems with this thing is that most of the dealers that took the trade-in deals and filed their paperwork are not getting reimbursed by the government like they are supposed to be. So what many are doing in lieu of taking the money from the government is simply selling them to scrap yards and eating the leftover cost.

[SilvrT]

Years ago I sold new & used cars for a living. I did this 4 different times...once for a Toyota dealer, once for a Ford dealer, once for a Chev dealer and once for an AMC/Jeep dealer (I did say it was years ago LOL)

 

Here's how dealers "deal" with a trade.

 

Let's say the car you are buying is new and has a sticker price of 15,000

Let's say that is 3,000 over dealer invoice.

Let's say they give you 5,000 for your trade (but place a real value of 3,000 on it)

You get the new vehicle for 10,000

 

So, doing the math, they just made 1,000 profit on the new vehicle (they gave you 2,000 more for your trade than it was valued at so that is subtracted from the original markup).

 

Now, let's say they sell your trade for 6,000 ... now they just made another 1,000

 

All the profits generated from the subsequent sale(s) of the trade(s) goes towards the profit made on the sale of that one new vehicle.

 

If there were successive trades on the trades, a dealer can conceivably make a lot more profit than if they sold that new vehicle at "full pop".

 

Of course, all deals don't go that way but generally they do.

 

Change the process...

 

You sell your vehicle privately for 5,000

You buy the new vehicle for 13,000 (2,000 off for cash deal)

dealer still makes his 1,000 profit and has no further worries if he'll make or lose on a trade.

You got the new vehicle for 8,000 ... 2,000 less than what you did with your trade.

 

Lesson to be learned...if you're going to trade, shop around and be tough and get as much as you possibly can.

 

Well, that's how it was in those days... things may be somewhat different now but I suspect not a lot.

 

Further, if you finance thru the dealer, oftentimes you can get a better purchase/trade deal.

[Jerry W]

Well, I am not thinking they were able to sell the "cash for clunkers" cars for $6,000 since it has to be documented that they would not return to the road. The stipulation was that the engine & transmission would be destroyed and parts could be sold off the rest of the car.

 

I traded in a clunker and if they were able to get $6,000 for the door handles etc, I say good for them.

[Squidley]

Thanks McBrush....I have been telling people that all along

[ArticusMedicus]

This was sent to me earlier today, just passing it along...I have no idea how accurate it is.

 

It's very accurate. The CFC program was just another handout for not one, but ALL of the people that got Stimulated early on.

 

The car manufactures got a temporary boost is production.

The car lots got a temporary boost is sales...very temporary.

The financing companies got a run on car notes.

And the Government got a huge boost in taxes, that will be even larger come tax season.

 

Now... In four to five months, the repo companies will get swamped with collection orders.

 

All at the expense of Jon Q.

TEF had it all right.

[ame=http://www.youtube.com/watch?v=jIfu2A0ezq0]YouTube - Tennessee ernie Ford - 16 Tons[/ame]