clunkerIn case you’ve been living under a rock, you have probably already heard about the so-called “Cash for Clunkers”bill.  For those of you who haven’t, let me be first to inform you that Congress has just passed this $1 billion bill that gives Americans an opportunity to get rid of their gas-guzzlers in place  of more fuel efficient rides.  This indeed can save money in the long run, but not everyone will benefit.   Keep reading to find out if you should take advantage of this offer.

Cash for Clunkers

Since I figure most of you are only vaguely familiar with Cash for Clunkers,  I will break down the key components. Cash for Clunkers runs from July 1st to November 1st of this year.  Basically, buyers who purchase a new car during this time period will be given a voucher for $3500 if they forfeit a vehicle built after 1984 that gets at least 4 mpg less than the new car.  If the fuel efficiency exceeds 10 mpg, the voucher increases to $4500!  However, don’t go rushing out the door to fuel up that old beater that’s been the yard just yet, because potential vehicles must also have been registered for at least 1 year prior to purchase.

What you should consider

Before jumping all over this deal, ask yourself the following questions.  They might change your mind one way or another.

  • How much is my clunker worth?  Remember this is a government voucher, not your typical trade-in.  Here, being less valuable actually works in your favor.  For example, if you have a beat up, barely running Ford F250 that is worth only $500, you’ll get credit for $4500 (assuming your getting a +10 mpg replacement) instead of say $250 from the dealer if you were trading-in.  Thus, the more trashed and inefficient your clunker, the sweeter the deal to you!
  • Does this vehicle hold any sentimental value to me?  If you have a so-called clunker, chances are it has been with you for awhile.  Like the family dog, for some people that old car becomes a part of the family.  It may be hard to give up, but many people can part with their “baby” knowing it is going to a good home.  However, there are no happy endings for these clunkers, because they will be crushed and recycled. 
  • Can I fix up that clunker instead?  Not every old car gets bad gas mileage or is unreliable.  If your clunker has been faithful or can easily brought back into service, it may make more financial sense to actually keep it.  Remember, even if you are getting a $4500 voucher, that new Prius will still set you back $22,000 + tax.  Depending on how much more gas mileage it gives you, it may be cheaper to just keep the ole’ rust bucket.

The $3300 new car

To show you why I believe Cash for Clunkers is worth it’s own post, I decided to find a little research to see how I could use to get a new car for an amazing price.  While cruising the forums at Fat Wallet, I came a across a link to a great deal on an 2009 Nissan Versa.  As you can see, the dealer is running a special on this vehicle for $7800.  Since it is new, I could possibly get it for $3300 + tax if I had a clunker eligible for the $4500 voucher.  Now, that’s what I call an upgrade from the old 86 Suburban!

Final thoughts

I must say I am already a fan of Cash for Clunkers.  Unfortunately though, I don’t have any beaters that would qualify for this offer.  However, if you are lucky enough to own a qualifying hunk of junk and can find a deal like the above-mentioned Nissan, I would recommend giving this serious consideration before it expires. 

Thank you once again for reading and have a great weekend!