Keep Your Cash, I Want My Clunker

The following guest post is from one of my favorite writers, Neal Frankle of Wealth Pilgrim. After reading the post, head over to Neal’s site and check out his free subscription options.

Let the Government go bail out somebody else.  It’s too expensive for you.

I’ll admit that I haven’t followed all the ins and outs of this program but I have two good reasons for not doing so:

  1. I have a 1995 Camry that I love.  My two eldest daughters used it to get to and from high-school. I still have a ten-year old at home and my ultimate goal is for her to use it to get to high-school 6 years from now.
  2. As long as I have a pulse, I will do everything I can to stop anyone I know from buying a new car.  It’s a complete waste of money in most cases.

So why am I bothering to write about this? Well, the subject came up over the weekend.  My daughter is thinking about getting a new car and “taking advantage” of the “Cash for Clunkers” program (with my beloved Camry no less!).  I’m dead set against it.

This program stinks worse than the junk you find when you clean out your trunk for one major reason:

It forces you to get rid of a very inexpensive mode of transportation and burdens you with a very expensive form of transportation.

An automobile is a device we use to move around.  That’s it.  It’s not a social statement or a tool to increase your self-esteem.  It’s a hunk of metal that moves you.

That being said, the question is, how do you get from point A to point B in the safest manner with the least cost. Right?  Am I missing something?

Let’s look at my Camry to illustrate the “virtues” of this program.  You tell me where I’m wrong.

Let’s take the first scenario where you trade in your clunker, receive $4500 and buy a new car.  What does it cost you to own that new car over the next 7 years?

A 2009 Camry (SE) costs a hair over $23,000 if you buy a new one.  Assume you buy it after turning in an old clunker, drive it for 7 years and sell it.  In this case, here’s how your numbers add up:

cashforclunkers1

So, if you buy the new car, it will cost you about $1700 per year to own.  This is without the high cost of insurance you must buy when you own a new car.  It also excludes the jacked up price you paid for the new car because everyone wants one right now and it excludes the maintenance cost.  (I could not find good data on what it costs to maintain a used car.)

Now, lets assume you pass on the cash and drive your clunker.  Here’s what it costs you to own it per year:

cashforclunkers2

This means you could spend up to $1400 per year on repairs and still save money vs owning a new car.  This assumes the car is safe and reliable for your particular needs.  In my case, my 1995 gem is perfect.

By the way, this analysis ignores the low cost for insurance for the used car.  No question about it, the clunker is better than the cash.

Will the clunker last another 7 years? Maybe not.  So let’s consider another alternative.

If and when my good old 1995 Camry dies, I’ll replace it with a 2 or 3 year old car.  It’s still going to be much cheaper than using this program.  Take a look:

cashforclunkers3

I used the Toyota site to determine the new car prices.  I used the Kelly Blue Book site to get residual values. Again, this excludes the higher cost for insuring the new car but the lower maintenance expense. Buying used saves you $600 every year.

The bottom line is even with the clunker cash, it doesn’t make sense to buy a new car.  So just remember this, friends don’t let friends buy new cars.

Additional Reading:

Comments

  1. We have a Toyota Corolla. A ’94 that, by our own math and experience, gets 34-40 MPG, using the cheapest gas, and no additives. There, right now, isn’t a vehicle that we particularly want that gets better gas mileage. Maybe if they keep it going until the Chevrolet Volt release, we’ll switch then (we can’t beat 230 MPG, when my husband drives 35 miles one way).

    And we’re not letting them destroy our Chevrolet TrailBlazer the way they have been. It’s not even 10 years old (2001), and considering it still has ORIGINAL parts on it, I’m not giving it up until we can afford a Hybrid version of it (since we purchased it 2 years ago, we’ve put 6K worth of miles on it, and a chunk of those are driving to and from Kansas and Indiana twice, LOL).

  2. “Cash for Clunkers” is a step in the right direction, but I wish it encouraged trades toward fuel-efficient, pre-owned vehicles, not just brand new ones. I drive a 1994 Chevy Corsica which burns more gas than necessary, and I’d be delighted to switch to a used Metro, Corolla or anything that gets better gas mileage. It makes little sense to take on payments for a brand new car that will quickly depreciate. I couldn’t afford full coverage insurance on my fixed income anyway.

    A lot of people seem to think these clunkers are being dumped in landfills, but that’s not true. The engines are destroyed or dismantled so they will no longer burn extra fuel, but the rest of the vehicle is salvaged or recycled. In that sense, the program is doing a world of good to protect the ozone layer and reduce dependence on fossil fuels.

  3. The nation is broke. We have to drive our clunkers until the engines fall out.

    The clunker program shows how stupid the politicians are. They do not understand the economy and are driving the nation future into debt. The political clunkers are what we need to replace.

  4. Normally I agree with the posts here, but this post’s math stinks and ignores the wealth of variables that come with any car.

    First of all the “Cash for Clunkers” program is, basically, for trading in gas-hungry old vehicles for fuel efficient modern models. In fact that’s one of the requirements to quality.

    And I notice your math conveniently excluded any talk of maintenance and gasoline. I’ve found that a sticker increase from 24 MPG to 32 MPG equated, in reality, to about $50/mo in savings on my gasoline (I am a heavy driver).

    So, if we assume that a more reasonable number is say.. $20-30 dollars a month in gasoline savings then some elementary math shows us that the new car will save you between $1680 and $2520.

    Now let’s include some other variables that are difficult to price. Parts for older cars are increasingly expensive and difficult to find (depending on make, model, etc.,) A used car is also something like buying a lottery ticket, it may or may not have been abused, and the dealer may or may not know about all the issues with the vehicle at hand. You may find that a used car purchase leaves you needing to replace a transmission, and then a pump, and then some breaks, and then some rotors, and so on and so forth.

    By contrast you have several mental, and financial, protections when you buy a new car. Free oil changes are often a feature on a new car, free registration is likely a feature on the new car. The new car will almost certainly have a 36,000 mile warranty within which any mechanical failures will be taken care of without your bank account being involved.

    So, when you say that the clunker is least expensive I’d say that really, really, depends. A new car is gonna give you peace of mind, better MPG (through this program), and so forth. It’s also worth noting that if your car already gets a satisfactorily high MPG rating it probably doesn’t even qualify for “Cash for Clunkers” in the first place.

    Either way, I feel this post is ignorant and not up to the quality of the others.

  5. lenore, thanks for adding a voice of reason. If the author’s argument is that leasing a new car rarely makes financial sense, then I completely agree. However, this author seems only to be evaluating the program from his position: getting rid of what is, by all accounts, a very good and well running car that costs little to maintain and drive. Quite simply, that is not true of many, many used vehicles. I inherited a Ford Explorer from my parents, and it will need a transmission overhaul within the next year. It gets terrible gas mileage, and I only use it for in-town trips.

    In my scenario, if my Car Replacement Fund was only shy $4500 from enabling me to buy a new, more fuel efficient, and more reliable vehicle, then I would trade in the Explorer. I don’t want a new car for status or whatever else this author is implying. I want a more reliable, better car. As it is, an extra $4500 brings my Car Replacement Fund very close to enabling me to buy a new vehicle, but I am still not quite there. So, I decided against the program. Give the relatively small amount of funds initially put toward this program, I wonder if the bill’s authors believed that most people would do this kind of calculus. It would be much more interesting if the author were comparing given up a crappy, poor mileage car with a better made, warranteed, and more fuel efficient vehicle. I suspect it would be much closer.

    As far as I know, there is nothing in the legislation that “forces” (his word, not mine) anyone to give up a perfectly good used car OR to lease a new car.

  6. Drive it until the wheels fall off and put them back on again…

    I’ve unfortunately wasted a ton on of cash on new cars in the past. I’m done with that. Now I get to fund everyone else’s new car via tax dollars.

    I saw a 10yr old Volvo killed off on Youtube the other day. I would have gladly traded a newer car and the payment book that comes with it for that one…

  7. @Frugal_Dad

    Making computations based on incomplete evidence or evidence that is between difficult and impossible to actually attain and then suggesting that people make buying decisions based on that incomplete evidence (regardless of disclosure) is, in my mind, a good way to squander the trust that your readers place in your blog.

    The reality of the situation is that a new car is still protected by it’s warranty for quite some time (I drive ~2,800 miles every month and have not yet passed that threshold a year later.)

    And I don’t consider that the environmental impact is the concern. This is absolutely about economics, particularly the economics of fuel over several years as we begin to transition to newer types of fuel, etc.,

    I just think telling people they should make buying decisions based on admittedly incomplete evidence is a bad idea, and I think the post leaves out many variables.

  8. Your charts are great! May I put them in a power point to show in my Driving School? We have a segment how to buy a car. I would like to include these, of course giving Frugal Dad credit

  9. Neal,

    I completely respect your opinion that it’s not the most amazing deal ever, because it’s not. I also believe, though, that for many people driving mid-90s to early 2000s models of SUV for instance would likely benefit from this program.

    The likelihood that an old, tiny, japanese made car even qualifies for this program is small because “clunker” in this sense is virtually synonymous with “gas guzzler”

    Not only that, an asian made car is going to retain it’s value for a long time and be a genuinely reliable car for as long as you want to keep maintaining it, in all likelihood.

    This program was, in all probability, designed to exchange gas guzzling American made SUVs with new vehicles that have significantly higher fuel economy standards. The transition from an old, used, Ford SUV to a new Chevy Cobalt is likely to be a stark one and represent significant savings to the person making the exchange.

    But I still have trouble accepting your “bottom line” proposition (last sentence) at face value. This issue is so complex that there is no bottom line, and to suggest there is one means you are responsible for it if people miss out on a good deal for taking your advice.

  10. Our second car is a 1991 Toyota Seca Liftback. I bought it for $3,500 australian 6 months ago. Had 1done 73,000km and very good condition. I have spent $600 on brakes and $1200 on other repairs, but there is nothing else coming up in the near future. I’m going to keep this one until I can pay cash for a newish vehicle and brake the cycle of constantly financing vehicles. It really drives very nicely. We have a Mazda 18 months old, and the Seca doesn’t feel that much worse than the Mazda and the insurance cost is fraction of a new vehicle. Fortunately the climate in Perth is such that a well maintained vehicle can push 30 years if you have to!

  11. If your clunker is over 25 years old, they will not even take it….seems somehow wrong that they are only taking newer rigs… age discrimination there.

    Actually – I’m totally against the program. 750,000 running cars going to scrap metal, instead of to another owner who would run them for a while yet. A waste of resources there, in my opinion. It’s a way to stimulate the auto makers to a small degree, but at such a cost per capita!

    People are actually buying hummers on this program – 2 sold here so far. I guess if you were in the market for a car anyway, this would encourage you to buy a new one, rather than a used one – but it also encourages going deep into debt – which is what got this country into so much trouble to start with… unless of course one is paying cash for the new rig.

  12. There’s a cost beyond strictly financial in having an unreliable vehicle. I’d rather pay $300/month fixed cost than pay $250/month variable cost. One day ruined by being stranded on the highway is something I can’t assign a dollar amount to. At some point a clunker is really a clunker.

  13. I get so tired of these articles sometimes.

    “An automobile is a device we use to move around. That’s it. It’s not a social statement or a tool to increase your self-esteem.”

    Neal, you sound like a parent berating a kid here. We all buy cars for different reasons. I happen to enjoy fast cars. I bought my last car used and drove it until it died, then donated it. I bought a new car this time because I couldn’t find what I wanted used. I plan to drive it, again, until it dies.

    But not everyone will want a Civic, Accord, “point A to point B” type of car. I have a fast convertible — a Mazda Miata. And it does a whole lot more than get me from point A to point B — it helps me do so with a smile on my face. I love my car. I take good care of it because I love it. I wouldn’t do that if I had some crap “A to B” car.

    Buying new, then driving it for 8-10 years, come out almost the same per year as buying used and driving it for 5 years. It’s when you buy new and drive for 3 years, then roll it into another car, that hurts.

    -Erica

  14. Couple of points to the responses here:

    First, new cars appear to get lower mileage than some old fuel-efficient cars because they changed the way they calculate the values. http://www.kiplinger.com/tools/gas_mileage/

    Second, the numbers behind the Volt are still more marketing than reality. I have heard that it only applies to really short trips. http://news.cnet.com/8301-11128_3-10308235-54.html

    Third, many of the cars getting purchased in the programs are trucks and SUVs! Way to be environmental. http://www.thetruthaboutcars.com/edmunds-dots-cash-for-clunkers-top-ten-list-gets-it-wrong/

    Fourth, I don’t care whether they recycle the metal or not, all this does is take extremely low-cost cars off the market and out of the hands of the poor… people who often desperately need a car to get to work or school and can’t afford one through regular channels. We used to call these ‘student cars’ the ones you bought for $400-$600 in cash to get you through college.

    I call BS on the whole program.

  15. I just gave my 1995 Toyota Camry to a young man who needed it very much, he actually was one of the mechanics at a Goodyear store and I thought he could use a hand.I received the most fabulous letter as a thank you I could have imagined.I bought a used mini cooper2002 that is good on gas but my heart will always be with my Cammy at 190,000 plus car who took me through thick and thin

  16. Response to #15…

    Just because a vehicle is new is no indication of its potential reliability. True, you will have a warranty and some legal recourse via Lemon Laws but the overall investment is so much higher. There are a ton of clunkers out there but we are also seeing a lot of perfectly functional vehicles killed off in pursuit of “better”. A relationship with a good mechanic will help seperate the wheat from the chaff.

    Bottom line- whether new or older you can still blow a whole day stranded on the highway- its all a question of whether you’ll pay up front or after it happens.

  17. Buying a new car seems like the ultimate sin in the world of frugality. We’ve all been told to hang on to what we’ve got and that it “doesn’t make sense” to shell out cash for a new car when we have a perfectly good (or fair) car that gets us from point A to point B.

    Well, I think everyone should get off their high horses and understand that every situation is different. My boyfriend just traded in his clunker, an old Ford Explorer with over 200,000 miles on it for a Subaru Impreza. He gets 0% financing for 5 years, Subaru’s have amazing resale value, and the car gets about 10 mpg better than the Explorer. The Explorer was also unsafe to drive and very nearly on it’s last legs. Highway driving was definitely out.

    The subaru is his first car, and while he might have saved for a couple more years to buy a used car the $3500 he got for his clunker was definitely worth it. He will be using his car for at least the next 10 years and then will most likely pass it on to me or family members.

    Posts like this one are extremely narrow-minded and don’t take into consideration the benefits of a program such as this for those who use it in a responsible manner.

  18. @Adam: I think “ignorant” is a little harsh. Neal pointed out in the post that he left out the difficult-to-ascertain costs for maintenance, and admittedly, that would impact the numbers presented.

    I’d also caution against the idea that new cars are more reliable. After all, they are “used” as soon as they roll off the lot. The age of the parts, and the driving and maintenance habits of the previous driver(s) have more to do with the reliability of the car. A quality, two-year old car can be in just as good a shape as a new one, and then again, both can be lemons.

    Finally, let’s be honest…how much environmental impact is this really going to have? Most experts say very little, if any. This is just another wealth transfer from taxpayers to car manufacturers. Unfortunately, it looks like the dealers will be left holding the bag.

  19. As a response to #21-
    Older cars tend to have cheaper parts and greater availability- the exception are cars that are uncommon or had short manufacturing runs. Parts for a ’95 Accord or a 2001 Chevy pickup are as common as grass and will be for years to come. Those cars were made in the millions within their design series and there is a large market for parts. So much in fact there are even aftermarket manufacturers making replacement parts.

    An alternator for a ’88 Fiat- might be a bit harder and cost a bit more…

    As far as “free” oil changes and registration are concerned- in the automotive world you’ve either paid on the front end (rolled into the purchase price) or the back end. No free lunch there. Paying for services on the front end eliminates your choice of service provider in the future.

    I change my own oil for about $15. Why would I “pre-purchase” that oil change at a dealer for $45? Why would I “pre-purchase” a dozen at that price? That makes no sense at all even if I don’t DIY- Jiffy Lube charges $30 with a coupon…

    I do take issue with some of the minutae of the math in the post but I don’t find it ignorant at all.

    The lifespan of a modern car should be in the range of 250,000 miles or so given reasonable maintenance and care. My current vehicle doesn’t even require a tune-up for 110,000 miles!

    Most of these “clunkers” I’ve seen don’t even have half that on the ticker but they’re headed for the crusher anyway.

    For the record I don’t have a problem with buying a new car- I do have a problem with the pervasive mindset that a new car is only going to last 5 years reliably, or that its a magic ticket to happiness or that you have to replace your ride every 100,000 miles or you risk life and limb. That’s simply not reality and that’s what is driving people (in large) to trade in their “clunker”. It’s not the environment. It’s not fuel efficiency. We’ve created a national mandate to scrap a perfectly good car to take cash out of our (collective) pockets and put it in the hands of someone else and that’s my problem with this whole scheme.

  20. Used parts…? Forget it!
    Legally, the clunkers cannot have parts taken off of them for resale. The entire car is to be shredded or crunched. Absolutely NO resale of ANY part allowed, down to the lightbulbs and chrome strips!

    Therefore, all those wonderful U-Pull-it parts will not be available (legally) from these 750,000 cars so far. That’s a LOT of waste, in my opinion.

  21. CHoloe made the astute comment that the use of this program could make sense depending on your situation. That makes sense to me.

    I wrote this in an effort to encourage everyone to consider the real economics. The math is accurate.

    I wrote that the goal is to have a car that gets you from one point to another in a safe and reliable way at the least cost. Clearly, being unsafe or unreliable is expensive and not worth it. If your goals go beyond that, and you can afford to have a car that brings you pleasure, there is nothing wrong with that. If you can afford it, go for it.

    I used my example – no post can cover all the variations.

    I hope this analysis gives you a tool that you can use to evaluate the pros and cons of the program.

    In an effort to keep this post from becoming a white-paper, I exclused maintenance costs and insurance costs. I think I pointed that out.

  22. Adam,

    My fear is that people are making the decision to “take advantage” of the program with far less information than I present here.

    Is it 100% complete? Does it cover every scenario? Of course not.
    But when you make the decision about this program, this kind of anaylsis is at least a starting point….and certainly far better than none at all.

    You can see by these charts how much you save by holding the clunker. If your maintenence costs exceed that savings……go for it. I think that point should have highlighted that point.

  23. I like what the author wrote. Save your clunker or bring it to life if it dead.

    I just bought a clunker (’93 honda accord) for $500.00 about 4 months ago. It was dead when I got it from a guy sold it. I went to junk yard and pulled some parts. I replaced the dead parts with new parts (well, old parts from junk yard). Total cost I paid to junk yard proximate $150.00. Test drove it. It ran super. I was confident enough with my new clunker so I took a trip to Myrtle Beach for a vacation. It was about 690 miles one way from Cincinnati Ohio. I drove straight without stopping except to refill gas. Well, anyway, I still drive it everywhere around town without any problem. My clunker now has 220,000 miles on it and I am proud of it. My insurance is about $30.00 a month.

    Why in a world would I buy a new car for? More debt? I spend my extra savings on my other things. Example, I have a high maintenance girl but she didn’t mind taking a trip with me to Myrtle Beech in my clunker. We stayed in 4 stars hotels, eat out at expensive resturants, etc… Can’t you do that if you have a $400.00 monthly payment on your new car?

    Well, good luck everyone. Love your clunker as you love yourself!

  24. I think in some cases it does make sense to take advantage of the program. We just used it to purchase a new Saturn Astra last Friday. Between the Cash For Clunkers we received for our 1994 Blazer that we never drove because we were afraid of getting stranded somewhere and the dealer incentives, we got a whopping $8,895 off the invoice price. We paid the $13,000 including tax and title in cash, and now we have an excellent car that we’ll pass on to our oldest boys when they start driving 9 years down the road.

  25. Adam,

    I appreciate your comments. I really do. I always learn so much from and I thank you.

    My bottom line is, it makes no sense to buy a new car with the clunker.

    My second graph compares buying a new vs a 2-year old car. When you buy new, you get the $4500. When you buy used, you get a lower value. In this case, $3k less.

    The numbers indicate it is cheaper to buy the used car under those assumptions and I do stand by it.

    So, what I’m saying is, if you can keep safe, keep your clunker. If your car must be replaced, it probably makes sense to forgo this program and buy a two year old car instead.

    I respect the way you’ve put your comments and arguments together. They are well thought out and well made. But I do stand by my conclusion.

  26. One of my co-writer’s writes passionately about Cash For Clunkers. It’s a TOTAL BOMB! If you’re driving a $3,000 year old beater, you have NO BUSINESS buying a new $25,000 car!

    This program will put hundreds of thousands of Americans in the financial hole at exactly the WRONG TIME!

    Keigu,

    Shogun
    Slicing Through Money’s Mysteries

  27. Your calculation doesn’t take two factors.

    a) You’ll end up paying 4 500 USD in taxes one way or another if you cash in your clunker. Government gets money through taxation.

    b) Global warming guys believe that your camry is a direct threat to all live on earth. You’d better your right to pursuit of happines (affordable transport in this case) right away. It’s so XVIII’th century anyway.

    Destruction of property as a means of fighting the crisis? Come on. Everybody knows it’s silly. It’s good that you worked the numbers to show it clearly.

  28. Shogun – 1/10th on a car???? Boy, that would leave me hurtin’ for certain! :)

    As I make UNDER $20,000, you would say that I should only buy a car for less than $2000…. nope – not gonna happen. Spent that $20,000 on my 2001 Forester, new at the time as the used ones were costing just as much, and paid if off in 2 years. Spent a lot of that on my 04 (Used) silverado this year – and paid CASH for it.

    I don’t think the 1/10th income is a good indicator of what you should pay for a rig – especially if one is frugal and spent cash and did NOT go into debt.

  29. Don’t know why some seem to take such an aggressive stance on Neal’s comments. Isn’t Neal just provoking some thinking. At the end of the day all thoughts are modified to ones own needs. We have a brand new car purchased so that our teenage drivers have a car to drive with latest safety equipment, and we traded in our family sedan for an 18 year old Corolla for mum and dad to drive. Both cost us money, one in depreciation, and the other in repairs. But this arrangement suits us at the moment. I thought US cars were much cheaper than in Australia, but it doesn’t seem to be so anymore.

  30. I do think that even when someone leaves an aggressive comment, we can all learn. I’d rather have the comment than have the aggressive feeling and not know about it. (In a perfect world, I would just love it if everyone loved everything I wrote but that’s not possible).

    Having said that, I notice that whenever I write anything with hard numbers, some people just get very upset.

    Part of this has to do with the constraints of writing an article instead of a book – no post can cover all the scenarios.

    Also, I believe that one or two readers may have already participated in the program or plan to and feel attacked. That is a shame because, as you said Chris, readers should take the logic of the post and apply it to their situation. That doesn’t mean everyone will have the same answer but hopefully, it means we’ll all have a different and broader perspective with which to evaluate.

  31. I think the “spirit” of the Cash for Clunkers programs is a great idea- replace old, poorly working cars/trucks that have horrible gas mileage with more fuel efficient cars. A functioning Toyota Camry doesn’t fit this. (Does it even qualify?)

    Yes, the program isn’t for everyone, but I don’t think you should be so quick to knock it as a whole. Sometimes making good choices for our environment is worth spending a few extra bucks.

  32. Meaghan,
    I’d feel better about the whole program if I genuinely thought it was about the environment which it certainly isn’t (IMHO).

    The amount of environmental damage involved in manufacturing a new car (CFCs, Mining, lots of energy involved) far outweighs whatever pollution contribution these “clunkers” have left to contribute to the environment within their limited lifespans. Several people involved are trading in old third or fourth cars that were rarely driven (hence limited pollution generated).

    This program does little more than redistribute some wealth and unfortunately the folks I know who’ve participated needed a new car like an additional hole in their head. They have taken on debt they will be hard pressed to pay or overspent considerably.

    Admittedly there is an “ideal” situation to participate in the program to accomplish what the gov’t portrayed to do, but I’m guessing that it’s fewer than 10% of the transactions to date and none that I’m personally aware of.

  33. Mike – I agree – in my opinion it is not about the environment. It is about stimulating the economy again – and stimulating the car manufactures, car parts manufacturers, and car dealerships. By taking 750,000 cars off the road permanently, apparently 750,000 new cars will be purchased, letting the money flow up and down the line – salesman, dealer, bank, parts makers, manufacturers, etc. And by taking those cars off the road, all those used parts in those cars are also permanently off the used parts markets, further stimulating the new parts dealers and manufacturers.

    It can’t be just about the environment when one can buy a hummer, as well as suv’s and trucks. Not that there’s anything wrong in my book with buying those, just that it’s not an environment thing if all those are allowed. (in my opinion)

    Looks more like another bailout, from my vantage point.

  34. This has been a very interesting post! Thanks Frugal Dad for writing it. It certainly has brought several different perspectives to the table on the whole issue of the Cash for Clunkers.

    Personally, I drive a 1998 Lexus that has a total of 140,000 original miles on it. It is in good working condition and the body is in great shape. The inside is in great shape except for a little leather fading.

    It doesn’t qualify for the Cash for Clunkers program. It gets over 30 miles to the gallon. Even if it did, I wouldn’t trade it in for a new car payment or to let it go to a landfill somewhere.

    In my opinion, this whole Cash for Clunkers program was designed to get the SUV’s off the road, stimulate sales for the government run auto makers, and put Americans further into debt so that we become more dependent on the government.

    That being said, for those who have qualified “clunkers”, it is an individual decision as to what is going to be the best deal. Each person has to look at what their own household can comfortably afford and decide. Don’t let some commercial whose intent is to sway you into buying a new car make the decision for you. Do the research, do the math, and make the best decision for your household.

  35. Hi Marci – True, if you can pay CASH for your automobile, you can buy whatever you want :)

    I am VERY impressed you paid off $20,000 in two years with your income. You’ll have to give us tips here and on my site.

    Yes, based on my rule, if you want a $20,000 car, one should make $200,000 or more and pay cash. A car is a total want, not a need.

    Best,

    Shogun

  36. Shogun – have to disagree (nicely) on the car being a total want, not a need, depending on where one lives.

    In many places, especially rural America, there is no other good alternative to driving if one wants to get to work. There is no bus here, except around town proper – so if you live or work outside of the city limits, you’re out of luck. Bikes are not good for a grammi hauling grandkids around after work, nor good in our 100 inches of rain a year and wind gusts to 50-60 on a regular basis. And as I live in the city limits, a horse is not allowed either (no livestock in city limits). So, I NEED a rig :) ALso need it to haul my firewood – free for the getting – as opposed to paying $180/cord for the wood.

  37. This program is geared towards people with older SUVS, Trucks, and Minivans during the 90′s-early 00′s Minivan and SUV craze. Those drivers are spending at least $40 a tank and running into numerous repairs. I used to drive a 98 explorer and it ran great until it hit $100,000 miles. Every year from 2004-2008 I spent at least $1000 in repairs. I gave it to my parents when I bought a new car last year because I’d only get about $800-900 for it after all the repairs and problems. They only used it for hauling stuff but it wasn’t a reliable daily driver anymore. If they did drive it everyday it would’ve had more problems. They just traded it in and got $4,500 under CARS and got a Hyundai. They got way more than they could’ve traded it in for, dont have to worry about repairs, and save alot of money on gas too.

  38. I believe that whether or not to do “Cash for Clunkers” depends completely on one’s situation. If someone is driving a vehicle on its last legs and has just been waiting for extra incentive, this program is good (for the most part). Never should anyone use it, however, if s/he cannot afford what’s to follow in terms of payments and insurance. I think it’s really important to note that, when buying a new car, the owner is in control of many decisions, especially on how long it will last (proper — but not over — maintenance).

    When I was younger, I tended to switch cars every couple of years (much more materialistic then). I bought my first new car in 1994; it was a Ford Aspire. It got great gas mileage (40 mpg) and was perfect for a graduate student who was also working full time. In 1996, I was in an accident that hugely woke me up. While I loved that little car (presigous by no means), I learned how unprotective it was. I was driving my little half sister home and another driver ran a stop sign. Praise God, I saw the car and slammed on the breaks, so it hit the front end. (Had I not, my sister would have been seriously injured). We both ended up with soft-tissue damage. I continued to drive the vehicle. Finally in mid-1997, I was in the position to buy a different vehicle, so I purchased a ’97 Kia Sportage (new). I drove it until it was truly on its last legs (where I was spending tons on fixing in 2004). After parting with $800 here and $500 there, I decided it was time to part.

    Rest of the story (with a moral):
    I did my homework. I researched, researched, and researched (and then researched some more). I also test-drove many vehicles that were top on the list. I did need an SUV because of my activities. I ended up purchasing a Jeep Liberty 4×4 Renegade that was specifically designed for bad and off-road conditions. That was the end of 2004 — little did I know I would end up in VT two years later. VT has true winters (12″ of snow one day followed by 19″ is common — as well as ice storms), and the winter of 2007 had the highest snowfall in its history. Yet, I never missed a day of work because I couldn’t drive in (30 miles away with lots of hills). In fact, the day after the “Valentines Day Blizzard” where it snowed 36″ in less than 24 hours, I made it to work the next day (only to find the office and factory 1/3 full). Now I live in Colorado, where the winters aren’t nearly as harsh, but I am glad that I can drive in any condition (whether here in the front range — only 5,800 ft at my place and 14′ers in the high country).

    Moral:
    I researched to find a vehicle that would go anywhere. I bought what I could afford (I paid it off last year). I bought what I needed. Need is the important point here.

  39. Chris- even economy cars are on the ok trade in list…I was surprised to find my Subaru at 25/29 mpg on the list of approved cars. Not that I’m trading in a perfectly good 10 yr old car with only 115,000 miles on it – but I just wanted to see what all was on the trade in listings.

  40. Yesterday, I helped a friend pull some parts at the local junkyard. There was a special section for the Cash For Clunkers cars.

    The salvage yard has a list of specific parts from a C4C car that are for sale and which parts are not. Obviously, the parts affected by the “euthanization” process are not available. These cars aren’t just scrapped or simply disposed of.

    Speaking of which, parts for older cars are still widely available. Manufacturers use many of the same parts for several years of production and across several different models. Each part in a car isn’t uniquely manufactured for each unique vehicle. For example, many Oldsmobile parts will fit on Chevrolets, Buicks, and Pontiacs. Many of those parts are identical.

    Fear, uncertainty, and doubt is a classic sales technique. The new car salesman will tell you that your older car is unreliable due to its age. You’ve heard your friends say, “I’d rather have a $300/month payment and peace of mind…”

  41. I agree with you totally! Why in the world would someone want to go in to debt for a new car now when there is no job security and the economy is as bad as it is. My husband was watching on the internet how they were “clunking” these so called junked cars, and they were perfectly good vehicles that in my opinion could be used for some of the people that are having a hard time right now. People are crazy sometimes..I say why trash something that is paid for to take on a new bill when you don’t know if you will have a way to pay tomorrow. All these people who are buying cars may end up losing them in a few months because they could not afford them in the first place.jmo

  42. Hello everyone.

    My previous posting is #31 if anyone is interested reading.

    Now here is another program the government is throwing at you and it is true. “Cash for clunker appliances” if you want to buy new appliances such as a washing machine, stove, dryer, etc… you should go down to Home Depot and ask for a salesman. You can save $200.00 to $400.00 if you trade in your old clunker appliance.

    Now this is a very good program I think. In my opinion it makes sense, it stimulate jobs and economy because it is not a bailout program like for the auto industry which it caused tax payers billions of dollars already. This program is not putting people in more debts for years to come. I have an old washing machine that stucks halfway every time. I called several repair men to check on repair costs but each one of them gave me a big quote which cost nearly buying a new washing machine. Then I decided not to fix it and hauled it to the metal scrap yard vendor a few miles down from my house and I sold it for $25.00 for scrap metal. Then the next day I found out this “cash for clunker appliance” on local TV news. I went back to the scrap yard buyer and bought it back from him for $20.00. Well, not from the same guy that I sold to. He sold it to me right away because he had no place to store it. He had too many old appliances sitting around already and could be weeks before the big metal companies buy back from him. He asked me why the hell I want to buy this piece of crap? I told him I will fix it myself. I assumed he didn’t know about the “Cash for clunker appliance” program otherwise he would jacks up the price. After all I made $5.00 from him. Well, next step on the same day I hauled it to Home Depot and trade it in for a new GE washing machine $549.00 minus $200.00 for a trade-in clunker washing machine. My new washing machine cost me $349.00. Couldn’t be happier than that. Now, you tell me if I am wrong. Is this “cash for clunker appliance” better than the “cash for clunker car”? Personally I am ok to drive in a clunker car but I can not stand it wearing dirty cloths. I like to fix cars but not a washing machine.

    I’d like you to tell me which of the two programs is better?

    Thanks
    Tim

  43. my husband is a 25 year tech at a Chrysler dealership. we would never buy a new car… ever. they are poorly made with inherent problems arising from over engineering. all this technology comes at a very expensive price. body problems in brand new cars that cause chronic leaking, adhesive that hold interior trim and door panel pieces that have not been temperature tested and are now popping pieces off of your new car when the weather heats up. computer diagnostics tests that are not only over complicated and expensive, but unreliable. Chrysler may pay our mortgage but a 68 camaro lives in our garage. built like a tank! has lasted 40 years and will hopefully last us 40 more. nvmy68

  44. Sir. 7 years of maintenance costs could easily exceed $600 a year.

    A vehicle that is already 14 years old my very well have 100 to 150 thousand miles on it. Many parts will already be broken or past their service life, requiring replacement soon.

    Also, if I’m going to be allowing my teenage girl to take a vehicle on her own to highschool, you can be sure it’s going to have safety innovations that were not available to vehicle manufacturers in 1995.

  45. I have a clunker, but I love it. It’s a 1994 ford aspire. But my clunker baby has a small problem. I changed the clutch and not the thing will no shift in to 2nd or 4th gear. After playing with th linkage and trying to shift it from under the car and nothing worked. I took to the first tranny shop paying the 200.00 dollars they could not fix it. Then took it to the dealershop and 1000.00 dollars later and still no 2nd or 4th can someone tell me how to fix it or what to try next I need my car back.. Thank you Tammi

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