Many auto dealers and consumers alike are relieved to learn that President Obama has signed into law a measure that triples the budget of the $1 billion "Cash for Clunkers" program.Originally set to run out of funds on Friday, the new budget will extend the program into Labor Day weekend, and promises to not run out of money.
What is "Cash for Clunkers?"
If you're not familiar with the "Cash for Clunkers" program, it was created to help remove less fuel-efficient vehicles cars off the roads, while helping to boost the economy by moving newer vehicles off of auto dealer lots. Under the conditions of the program, passenger car owners are eligible to receive a voucher worth $3,500 for trading in a drivable vehicle that had a combined city/highway mileage of 18 miles per gallon or less when it was new for one that now has 22 mpg. If you want a $4,500 voucher then your trade-in must have had at least 18 mpg new and must be traded in for a vehicle with at least 28 mpg.
The program has seen so much success that only a few weeks after it started, funds have depleted considerably. In fact, to date more than $775 million of the $1 billion has been spent, hence the extension. The good news is that the extension is predicted to produce more than 500,000 additional car sales.
Not Everyone Supports the C.A.R.S Program
While many are celebrating the plan, some Republican Senate members question its cost and effectiveness. They believe that the spike in car sales is deceptive because many car buyers held off on purchasing their vehicles for monthsafter receiving news of the program, and would have purchased cars regardless. They argue that America has no funds to be promoting car purchases in a time when the country is facing mass lay-offs, credit delinquencies and rising foreclosures.
If you're going to participate in the government incentive, make sure you are not frenzied in a rush to get a new car. Research your auto loan rates and secure financing ahead of time, unless you qualify for a 0% interest-free financing incentive from the dealer.
***What do you think? Is the "Cash for Clunkers" program a big success, or just a ploy to spend tax dollars with no true benefit to the American economy?***
