One serious down side to this program is that it enables people who can't really afford a new car to suddenly have a good down payment. Such people will then qualify for a higher interest loan than someone who can afford a new car. Then, they will have payments that they can't keep up. Next thing you know, the car is getting repo'd.
One serious down side to this program is that it enables people who can't really afford a new car to suddenly have a good down payment. Such people will then qualify for a higher interest loan than someone who can afford a new car. Then, they will have payments that they can't keep up. Next thing you know, the car is getting repo'd.
Sound a little like the housing debacle????
Welcome back, eto. Hope you had a nice hiatus.
If the above is to be viewed as a serious consideration, one must presume that both the 700,000 buyers who participated and those who underwrote the loans are all stupid. Fat chance. When dealing with those kind of numbers there will always be a percentage who overextends, but to argue that is may have happened in meaningful serious numbers is weak.
Further the tripe posted by the author is flawed on a number of levels, which I've already outlined.
As I've said before, if you wish to fault the program there is plenty of room. But trying to presume that the owners of the new cars will drive them for only one year, were too stupid to know what they can afford, were underwritten by moronic loan underwriters, or could have sold the vehicles outright for more than they received in trade value is an excercise in reaching.
Note that the top ten vehicles were all 10 to 15 years old. Apply the math shown at the top of this page to say 12 years and then tell me how the fuel savings look compared to the expenditure. The above posted tripe also presumes static oil prices. Note also that even though the original buyers may sell the vehicle, the lower fuel consumption will be passed to the new owner.
It is interesting that on one hand the argument is that the cars traded had so many more years of useful life and on the other hand, the fuels savings on the brand new cars should only be considered for a single year. Won't those new cars be useful for many decades as is presumed by the first argument?
You guys think much? Complain first and foremost that it was
funded with money we do not have.
If the above is to be viewed as a serious consideration, one must presume that both the 700,000 buyers who participated and those who underwrote the loans are all stupid.
Sorry that I forced you to presume that. Not the point at all. Just pointing out the parallel in political thinking. Of course not all of the 700,000 buyers what I characterized.
But I think you are coming down a little too hard on me. But I've read that you have a lot angst built up regarding this issue with others on the forum.
Heck, the wife and I seriously considered this. Our '05 minivan would have qualified. It is 100% paid off, gets mileage that would have qualified, passed the all thecriteria, and was listed on a gov't website as a gas guzzler. Chysler was matching the $4500 gov't deal. So we would have gotten $9000, and the trade in value was only $5000.
But it has less than 40,000 miles, a dvd player, newer tires, leather seats, excellent mechanical history, and we like it. Plus, we hated to think such a nice vehicle would be crushed, and we couldn't see going back into debt. So we chose not to participate.
For us, it could have made sense. For some other suckers, they might have been convinced to buy something they really shouldn't. It's too bad the gov't fooled even a fraction of the 700,000 folks into such a bad decision. That's all I'm saying.
Note that the top ten vehicles were all 10 to 15 years old. Apply the math shown at the top of this page to say 12 years and then tell me how the fuel savings look compared to the expenditure. The above posted tripe also presumes static oil prices. Note also that even though the original buyers may sell the vehicle, the lower fuel consumption will be passed to the new owner.
It is interesting that on one hand the argument is that the cars traded had so many more years of useful life and on the other hand, the fuels savings on the brand new cars should only be considered for a single year. Won't those new cars be useful for many decades as is presumed by the first argument?
You might also want to factor in a presumption that many (maybe most) of those 700,000 clunkers likely would have been traded in, or junked during that time frame, even without the government giveaways.
Also... The folks who were able to take advantage of the program get a double savings... They got the $4500 in free taxpayer money, plus, THEY are the ones who are reaping the benefit of the better gas mileage. So, they get $3 Billion from the taxpayers plus another ~$3 Billion as a result of less fuel consumption. All I got was a tax bill...
Ghetto economics
