Is cash for clunker a windfall for consumers?

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Not really. Some issues: eligibility, trade-in value of your old clunker (maybe more than $3,500 or $4,500), also your clunker may worth more than its face value (consider the insurance cost and property tax of a new car).

MyMoneyBlog has did some analysis on his/her own (used) vehicles; and has a comprehensive article including a FAQ.

What is cash for clunker? Basically this is a bill the congress is working on to stimulate the car/truck sales, the government is offering $3,500 or $4,500 vouchers to consumers who are willing to give up their old clunkers (gas guzzlers) and apply the voucher to buy a new fuel efficient vehicle.

Good idea and a stimulus for car makers, but not necessary a windfall for consumer. The same idea has been used in Germany and it has stimulated car sales quite a bit.


  1. 60% of the cars that are currently donated to charity will be eligible for voucher under the cash for clunkers program. Since the tax deduction for donating a car is only $500 or what the car sells for, charities won’t be able to compete. A better idea is to just go back to allowing the donor to claim the book value for their car donation. This way all vehicles are eligible, the government doesn’t have to spend $4 million on vouchers and administer a program with rules which are not enforceable! Since many of the cars that are donated are recycled there is an environmental benefit as well!

  2. As the economy became the doubtful some private sectors tries to came up with their own stimulus plan. Maybe they don’t still want to seek for government financial aid , tus they ty try came with their own solution. With regard to this, dealers have their own automotive stimulus plan, to go with the one that the government cooked up. The dealer’s automotive stimulus plan is not, repeat NOT, a government program. How it works is that dealers will put up $500 to $4500 of incentives of their own money for customers to trade in their old vehicles, but unlike the federal Cash for Clunkers program, customers are offered the rebates on used cars. Some Congressmen are less than thrilled that the cash advances they put into the program could potentially have been avoided. However, the short term loans of the automotive stimulus plan of dealers is entirely self funded, entirely up to the dealership.

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