Drivers Cash in Clunkers as Deadline Nears

Dealers Front Rebates While Waiting for Gov't to Make Payments

(CBS)  When Lee and Pam Vargo heard the cash for clunkers program was about to hit a dead end, they knew they had to make a deal. Like many American motorists, they're trading in their pickup for a smaller SUV.

"There's business and customers," Brian Benstock of Paragon Honda in Los Angeles told CBS News Correspondent Ben Tracy for "The Early Show Saturday Edition." "More and more business is dead on the side of the road. It needed a jump start."

Nationwide, 489,000 clunkers have been traded in for $2 billion in rebates. Yet for some dealers, the program has been a real lemon. They have to front the money for the rebates and government has been slow to pay them back. The government owes one L.A. dealership nearly $800,000. In fact, of the $2 billion in rebates dealers have paid out, the government has paid back at least $145 million.

"They're going to get their money," Transportation Secretary Ray LaHood said this week. "We have the money. Congress provided the money."

Major auto manufacturers are now loaning dealers money for the rebates. But those who took the clunkers say the government owes them their cash.

"I hope that the government has enough money to pay us," said Don Rohde of Galpin Ford in Los Angeles.

The government insists there is enough to pay for deals made before Monday's deadline of 8 p.m. Eastern.

Jon Linkov, managing editor for automobiles at Consumer Reports, told CBS "Early Show Saturday" Co-Anchor Erica Hill that the program was a success for consumers who took advantage of it.

"For dealers, it is going to be a little bit of a float," Linkov said. "For the country, yeah, we have people working, people getting commissions, but now we have a tipping point where sales might peter out."

Linkov said the program wouldn't appeal to people who want all of their money to go back to American car companies, but the program benefits American drivers.

"Consumer Reports says these vehicles are all reliable," Linkov said. "All of them are reliable vehicles. They get good fuel economy. It has been a success in that respect, getting old vehicles and unsafe vehicles out of the hands of inexperienced drivers potentially."

After Monday, Linkov definitely expects to see a dropoff in car sales.

"We're probably seeing people holding off in May and June from buying because we heard cash for clunkers, so they waited and rushed into dealerships" Linkov said. "That's also pulling in people from October, November, December, January, February of next year who ran in to get the money too. We'll see a dropoff."

[louisvilleliberty]

This program was and is a joke!!! While this fools the American Public into thinking that the economy is getting better and also fools the ones that got a new car the the government is their freind and is their to help in reality this is nothing more than smoke and mirrors. With the bunch we got in Washington its about how people feel not how they actualy are!!! I listen to our President and his staff talk about the success of this program when dealerships are not getting paid and the car salesman localy are not getting paid what they should since the dealerships are not getting paid. We need to wake up as citizens and realize that we have let our leaders Republican and Democrats alike put our country on the verge of financial ruin intentiionaly. The middle class most of us knew will be completely eroded away within 10 years and we will then have the Rich and the working poor. My faith in the government left long ago but worst than that is my faith in the American public not standing up and forcing the government to follow what constitution we have left. The tax police is getting ready to make a whole new breed of criminal in the form of business owners to set an example for all that we better do what they ask or wind up in prison. I see very little that our elected officials are doing to help the country and alot to help themselves when things fall apart.

[RobynRoberts100]

I put together some good resources, if you?re interested in the Cash for Clunkers program.

http://www.autostimulusplan.org/

I gathered a list of Pros and Cons for the individual (4-Pro, 6-Con), and Pros and Cons for the Collective Soul (6-Pro, 12-Con).

After the results are in, I?d like to post the statistics to show benefits vs. consequences.

[SkirtLifter]

by haint-talkin August 22, 2009 1:52 PM EDT
own my house and it's paid for.

bought a new car last year without any gov. program.

don't allow christian creeps from the south on my property.

hate bush, rove, cheney and other assorted republican snakes.

that's my philosophy.
__________________________
I've read your posts before. The above statement HAS to be a lie. No way pal. If your house is paid for, you received it in an inheritance. You like handouts.

Many conservatives hate W. They hate that the repubs moved away from conservative principles. But we don't spew vile hatred of fellow Americans because of party affiliation.

You are an ignorant hater and there is NO WAY that you have a decent job, a new car that you paid for, and a house that is paid for. You lie dude! you know you lie!

You love socialist handouts, welfare, free medical, section 8, and other liberal panderings. Yes! Liberals tend to pander to the poor, ignorant, and lazy folks for votes, hence power. It's a power grab and you are a sucker for it.

[Illuminated1]

I think the program is excellect with only one issue...
I wasn't ready to purchase a car yet...
If I had warning of such, I would have been ready to deal.
Now I have to rush out and see if I can still do it.
Furthermore, I had hoped to get a Chevy Volt and am not comfortable purchasing now.

[1notrub11]

Programs like this that are "crammed in", usually end up with people being "left out" (no pun intended, or wait....). Bodes well for health care, doesn't it?

[tmittelstaed]

DON'T BUY THEN!!!!!

This is the VERY FIRST cash for clunkers program the federal government ran and it was a ROARING success.

The federal government has an excellent track record of when they stumble over a program that is successful, they like to repeat it.

I predict we will see many more Cash for Clunkers programs in the future. I can see the government using this program to stimulate interest in 100% electric cars when the automakers start selling them.

The only thing to really cry over is missing out on that matching discount thing that Chrysler was doing the first week of cash-for-clunkers. That won't happen again, I'm sure.

I'd also hold off on the Chevy Volt if I were you. The Volt doesn't have enough range off the plug in to make it worth while. Give it a few years and successive plug-in hybrids will have more range and will be worth buying.

If your really interested in getting ready for the electric car you should go out and hire an electrician to run yourself a 50 amp, 220 volt circuit to where your car is normally parked. I'm definitely going to do that before I sell my house since by then I'm sure it will be a selling feature, but I'll have to trench and lay conduit to do it. I may also have to replace the main circuit breaker panel since I think the feed into this house is an old 100 amp copper feed. A decent 220v circuit will let you run the high capacity fast charger so that an overnight charge becomes very practical.

[thgdriver]

Gotta go, somebody hold down the conservative fort while I am gone.

[thgdriver]

haint-talkin, if all ya got is personal attacks, why not let the grown ups post here about the article and you can go argue with a table if you have one?

[thgdriver]

Not to worry stopsocialism, till we take a number and get behind every hypochondriac in the country that thinks they are sick, we wont even make it to the table in the first place.

[thgdriver]

by haint-talkin August 22, 2009 1:13 PM ED

than sign on to a program that is beneficial to the american public.

haint-talkin must have finally traded in that 1977 Ford F100 he's been holding together with chewing gum. Feels good having a new car I helped pay for outside your double wide, huh?

What's that knock on your screen door, talkin? The REPO man??? LMAO!

[thgdriver]

by credibility2 August 22, 2009 12:36 PM EDT

Absolutely correct, The richest man in the USA come a year or less will be the REPO man. The poor unfortunate that bought Nobama's hair brained idea will not even have the clunker to drive to work thus losing their jobs to boot. 30% of folks drive clunkers for hundreds of different reasons, the other 70% drive them because thats all they can afford.

[SkirtLifter]

yep

[tmittelstaed]

Sounds good to me since a year from now then I can buy me a 1 year old used car that will be really cheap!

[credibility2]

There's nothing like dangling a carrot before the eyes of some, causing them to go take on new debt, where many probably can't afford the new debt. How many years will it take these folks to pay off their new debt, including the length of time to break-even on any savings of fuel mileage for increased fuel performance? Did these folks really consider this financial scenario? Probably not. Not a bright move by those easily fooled.

[SkirtLifter]

You are correct sir. These folks were driving clunkers because they can't afford the debt of a new car. And this "Cash for Clunker" program leaves out many people....here is how.:

Someone like me was NOT allowed to buy a clunker from some guy that truly can NOT afford a new car. There is a stipulation that you must be the owner of the clunker for at least one year before getting the rebate. This stipulation ended my plan...

I wanted to buy my neighbor's old Blazer. I wanted to give him $2250.00 for a vehicle that hardly runs, and is an eye sore on his side yard. He is currently laid off and could use the money. I am in the market for a commuter vehicle and could use a $4500.00 gift from our gov't. (which I am sharing equally with my neighbor)

My neighbor would benefit greatly from the extra cash. I would save $2250 on a new car, which I will buy regardless when this program ends. And a junk heap would be removed from the road.

Truly a win-win WIN!!!

But these dumbazz, impetuous, poorly planned Gov't programs NEVER benefit me!!

NEVER! I never get a handout, or financial help. I always pay. ALWAYS!

Pay pay pay pay....frickin' angers me.

[tmittelstaed]

Skirtlifter, your neighbor who is laid off cannot afford to fix his Blazer, or pay for gas for it, so as long as he sits on it it is still being removed from the road. In other words the taxpayers already GOT what they wanted - which is for your neighbor's Blazer to not be driven on the road. What the taxpayers wanted that they COULDN'T get without paying for it with CFC was to take perfectly servicable, drivable, running SUV's and trucks and other gas hogs off the road. Like, for example, the 2 mid-90's minivans that my family owns and drives, and that I keep maintained. (I do my own wrenching)

Sure, there's a lot of junk cars out there, old clunkers that people have sitting in their driveways, front yards, back yards, etc. that broke down years ago and for whatever reason the owners just never bothered to fix them. Those are already OFF the road, they are not polluting - all they are doing is being eyesores that irritate people like you. Those aren't the taxpayers problem and the people that don't like living in neighborhoods with junk cars in yards should move to neighborhoods with deed restrictions and neighborhood associations that prohibit such things.

In my neighborhood we have over the years had a few of these - there's one right now a block over that's parked on the street with 2 flat tires. I'd like to see it gone, sure. But I don't want to live in a neighborhood with an association sticking it's nose into everything I do, so I didn't move into one.

If the entire point of the program was economic stimulus, then I would say you have a very good point. In actual practice then nobody would have had to even bother buying an old clunker if they didn't have one, because you would be able to go to a car dealer and the dealer would "sell" you a clunker off their own lot, you would then immediately "trade it in" and buy your new car. But the point of the program was to try to force the motoring public into smaller cars so that the American populace would use less gasoline. To do that you have to take away their gas hogs that they are using for their existing commuting.

[thgdriver]

by rafterman1 August 22, 2009 10:16 AM EDT
NY prison guard? Why are my tax dollars being used to pay your state salary? Why are my tax dollars going to pay for your pension and social security when you retire?

Hey rafterman, nyprisonguard provides a service and "EARNS" the money he is paid. What do you dead beats provide for the 4,500. I am giving you for a new car??

[Cyberian88]

Ditto what 'thgdriver' said....

Can't wait to buy another GM car!

[thgdriver]

This is just Nobama taking care of the UAW, you know, the union that helped put his sorry butt in the white house.

For every new car dealer (that includes Toyota and other foreign makes BTW)there is 6 used car lots going broke. Who is going to buy a nice clean low mileage used car for 12,000 when you can get a new one with a 3 year warranty for 10,000--(14,500 - 4,500 = 10,000). What about the sales, mechanics, clean up and office folks at the used car lot who are out of work now because of our bozo president?

[tmittelstaed]

You have no understanding of used auto sales. For starters, a 12K mile used car book value is much higher than $4500 so it will not be used for trade in on the cash-for-clunkers program, and so it will have to be sold through the used market. If used car lots actually sold these kinds of vehicles (they don't) well the supply of them isn't going to diminish.

Virtually all clean low-mileage 12,000 mile used cars go through 1 of 2 channels, they are traded in for new cars then resold on the used car section of the new car dealer lot, or they are sold through private auto brokers who are usually ex-car sales managers who have relationships with new car dealers. None of these kinds of cars need mechanical work and they don't go through used car lots.

Middle-aged 50K mile used cars are mostly sold through the newspaper or auto trader or sometimes ebay or craigslist, because they are cheap enough that buyers can afford to pay cash for them, and the used car dealers won't pay anywhere near what they are worth. You would be surprised the number of people out there who can plunk down $6,000 cash for an excellent condition 70K mile used vehicle. Sometimes these cars are traded in for new cars and the best of them the new car dealer will sell, but most the new car dealer will sell at auction. These new-car-dealer rejects are the cream-of-the-crop of what is sold through used car lots.

Older cars that are above 100K but under 180K mostly go through craigslist now and sometimes ebay and sometimes the "thrifty" section of the classifieds in the newspaper. It is these cars that are mostly going to be traded in on the cash-for-clunkers program. Before cash-for-clunkers, many of these did go through used car lots. But, with many of these cars the owners cannot afford to finance a new car even with the cash-for-clunkers rebate. And what is happening nowadays is that the market is so flooded with old SUV's that are in this age range that people can't even sell them through craigslist or the newspaper anymore, so a lot more people than before are trading them in at the used car lots.

The used car lots right now are buying with a vengence, because they are picking up used cars for next-to-nothing because the value of the older cars has fallen so much. They will do what they always do which is inventory these cars then sell them for a lot more money later on. They actually like cash-for-clunkers because most of what is being destroyed on cash-for-clunkers are big trucks and vans and SUVs and nobody wants them anymore because of the gas prices, so removing those cars from the market helps the used car lots who already have a lot of those cars in inventory on their lots.

Most people that buy at the used car lots are poor and cannot scrape together even $1K-$2K or so to pay cash for an older used car, so they have to go to the used car lots and finance them. And the used car lots are then pushing cars out on them that have a high chance of failing - and when they do, the buyers bring them back to the used car lot and finance mechanical work on them, and essentially never get out of debt, since by the time they pay off the car it's used up.

The fact is that without CFC to stimulate auto sales, this model year sales would have been so dismal that it would have seriously impacted used car sales a few years from now. Those brand new cars that are being sold today will be available to be sold on the used market 5-10 years from now, so that 5-10 years from now, there won't be a huge shortage of used cars.

[thgdriver]

Who the helll proof read the headline---shoppers buy clunkers as deadline nears--?? The clunkers must be Junked thats the law. The engines are filled with a jelly that hardens, rendering the engine useless. Ben Tracy is an idiot so is the person doing the proof reading.

[SkirtLifter]

To Ben Tracy, Please change the headline.

I actually read the article to see if people were buying clunkers really cheap, and trying to use them in a deal for a new car. I thought of doing just that until I learned you had to own the clunker for at least a year to use it for cash.

This article is not about buying clunkers to use in a trade in, so please, change the headline.

Thank you,

from California Bay Area

[nojoy01]

This article is also not about people buying the "clunkers" traded into dealers because dealers are worried about not getting paid for them.

[SkirtLifter]

Why does the headline read: "Shoppers Buy Clunkers as Deadline Nears"???!!!

Why the eff are shoppers buying clunkers, the article doesn't say??

[wtcmedic911]

thought the same thing.