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The Cash for Clunkers program has been receiving a fair share of criticism: is it green or not? For one the program is counting on the fact that by rewarding some of the road's biggest polluters, those cars' owners will make the right choice and purchase a much more fuel-efficient vehicle. The program is also dependent on the buyers making the right choice on whether or not they can actually afford a new car payment right now. There are lots of things to consider before you go jumping on the bandwagon, ready to take a sledge hammer to your old clunker in exchange for a moderate reward, and big monthly payments.
The Cash for Clunkers Program is Not as Green as You May Think
The Cash For Clunkers Program is counting on the fact that it is greener to use the energy and materials to put a new vehicle on the road, rather than keep the old one. One of the biggest problems with this thinking, is the new car the person trading the clunker in chooses doesn't even have to be all that much more efficient than the clunker to qualify for the program. Just look at the Cash for Clunker guidelines to see what I mean. In some cases, you are talking about a reward for a vehicle that is only 2 to 4 mpg improvement over the original clunker. You also must consider the fact that you might end up throwing away a batch of perfectly good polluting vehicles, for a new batch of slightly less polluting vehicles. If you are going to make the most of this, you better go for the gold, trading up to a 10 to 20 mpg improvement at the very least!
Cash for Clunker May Result in More Debt for Those Already in Financial Trouble
While there are indeed folks who have plenty of money driving old jalopies, in general, the people the Cash for Clunker program is aiming for are those who cannot afford a new one. So in a sense, what this program is urging these people to do, is buy a new car. If you are currently in any debt, this program might be dangerous for you. $4,500 is not going to get you too far in buying a new car these days. A Toyota Prius will run you about $22,000 for the very base model, so that'll leave you responsible for another $18,000 (at least), not including tax and all that other jazz. Assuming it is a perfect world (which it isn't), you have perfect credit, and you fall into 0% interest loan, you're still going to have to come up with over $300 extra dollars a month for the next 5 to 6 years. If you have it, great, if not, whoa your horses Tonto, let's think about this for a minute!
New Cars Are a Miserable Investment
Another thing you have to take into consideration, is new cars are miserable investments. There is a joke that says as soon as you drive a new Chevrolet Corvette off the lot, its price drops $15,000. Well, it's kind of true. Even if you decide on a Toyota Prius, you are still going to be paying a premium for the prestige of owning a new vehicle. Do you really need a new Toyota Prius when there are plenty of used ones just as good on gas mileage? It is true that the Cash for Clunkers will not offer a voucher for the purchase of a used vehicle. That would stifle the underlying plan to offer a helping hand to the limping automotive industry. But you can get a 2001 Toyota Prius for under $5,000, which includes 52 MPG city, 45 MPG highway, and a monthly payment of somewhere around $100/month. Your old clunker might not get crushed in the process, but maybe you can take a sledge hammer to it for free!
This is just a friendly reminder not to get caught up in the hype of the Cash For Clunkers program, as it is unfortunately not all it was cracked up to be. While it may prove a worthy, green investment for some, it is definitely not for everybody!
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More on cash for clunkers
Cash for Clunkers" Gets Green Light In House Committee
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Cash for Clunkers Debate Continues - Details Needed
Should I Cash In On My Clunker?
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