Cash for Clunkers email

[Reaper]

My uncle sent this to me, which all made sense. Just wanted your thoughts on it all.

"Ignore all the gas crap and just look at how the stupid car buyer got taken to the cleaners:

If you traded in a clunker worth $3500, you get $4500 off for an apparent "savings" of $1000.

However, you have to pay taxes on the $4500 come April 15th (something that no auto dealer will tell you). If you are in the 30% tax bracket, you will pay $1350 on that $4500.

So, rather than save $1000, you actually pay an extra $350 to the feds. In addition, you traded in a car that was most likely paid for. Now you have 4 or 5 years of payments on a car that you did not need, that was costing you less to run than the payments that you will now be making.

But wait; it gets even better: you also got ripped off by the dealer.

For example, every dealer here in LA was selling the Ford Focus with all the goodies, including A/C, auto transmission, power windows, etc for $12,500 the month before the "cash for clunkers" program started.

When "cash for clunkers" came along, they stopped discounting them and instead sold them at the list price of $15,500. So, you paid $3000 more than you would have the month before... (Honda, Toyota , and Kia played the same list price game that Ford and Chevy did).

So let's do the final tally here:

You traded in a car worth: $3500

You got a discount of: $4500

---------

Net so far +$1000

But you have to pay: $1350 in taxes on the $4500

--------

Net so far: -$350

And you paid: $3000 more than the car was selling for the month before

----------

Net -$3350

We could also add in the additional taxes (sales tax, state tax, etc.) on the extra $3000 that you paid for the car, along with the 5 years of interest on the car loan, but let's just stop here.

So who actually made out on the deal? The feds collected taxes on the car along with taxes on the $4500 they "gave" you. The car dealers made an extra $3000 or more on every car they sold along with the kickbacks from the manufacturers and the loan companies. The manufacturers got to dump lots of cars they could not give away the month before. And the poor, stupid consumer got saddled with even more debt that they cannot afford.

Obama and his band of merry men convinced Joe consumer that he was getting $4500 in "free" money from the "government" when in fact, Joe was giving away his $3500 car and paying an additional $3350 for the privilege.

Think this was stupid for those who were crazy enough to swallow this wonderful scheme?

Just wait until we get health care with no additional costs over what most of us now pay for health insurance and the best medical care in the world. Think that scheme might be designed by the same people who came up with Cash for Clunkers?"

Edited December 4, 2009 by Reaper

[Msterbeau]

Maybe the math is right... maybe not. There' no end to the anti-Obamaists who will tear down every thing he does. (If there were a conservative administration the same thing would happen) But the fact is people spending money gave the economy a boost it sorely needed. It may still take a long while to properly pick back up, but a glimmer of hope and a slight raise in forecasts might be all it takes for people to loosen their purse strings a bit and get things moving again. Maybe this time they'll spend more wisely and not get suckered into things they can't really afford. What really needs a shke up is the way banks and Wall Street operate and play games with peoples money. They create nothing yet they make billions. Fuck that.

[Rev.Reverence]

*pulls out big box of tin hats*

[Raev]

Printing that out and taking it up to one of the salesman that work in my company. He handled the cash for clunkers stuff. I'm going to get his inside take on it and report back.

[Raev]

Ok - a few points to make...

The author of the email sticks at the $3500 mark as his example. In 126 vehicles to come through my company, 0% of them were valued at that amount. 100% of the vehicles not only were worth under $1500 - but 100% of the vehicles also had major issues threatening their ability to even run. One of which, the engine blew within 10 minutes of it reaching the destination. Each one of those serious clunkers brought a credit of $4500. The original statement by the author is written with a slant to try and make the program look worse than it was.

As for the "dealers ripping you off-"

You know that sticker on the window of a car that lists its MSRP? It's illegal to go above that price. That is a federal law. Dealers know this. Dealers know they are LUCKY to get off with just a fine so high that it would shut down most dealerships. Doing a quick BBB search, there were no complaints of violations of this law registered.

"Making an extra $3,000 per vehicle in profit"

The average profit percentage for a brand new vehicle loaded with all the goodies and toys - is 2.5%...which is a very small amount of money on a $15,500 car. $387.50 I believe, off of the top of my head.

It's a propaganda email with half truths and misinformation.

[Gaf The Horse With Tears]

Raev: I just have to ask... What does the cars ability to ever run have to do with anything? According to the Cash for Clunkers program all vehicles traded in under the program HAD to be destroyed. The government even dictated how the cars were to be destroyed.

THIS PROCEDURE IS NOT TO BE USED BY THE VEHICLE OWNER

Perform the following procedure to disable the vehicle engine.

Since the vehicle will not be drivable after this procedure is performed, consider where the procedure will be performed and how the vehicle will be moved after the procedure is complete.

1. Obtain solution of 40% sodium silicate/60% water. (The Sodium Silicate (SiO2/Na2O) used in the solution must have a weight ratio of 3.0 or greater.)

2. Drain engine oil for environmentally appropriate disposal.

3. Install the oil drain plug.

4. Pour enough solution in the engine through the oil fill for the oil pump to circulate the solution throughout the engine. Start by adding 2 quarts of the solution, which should be sufficient in most cases. CAUTION: Wear goggles and gloves. Appropriate protective clothing should be worn to prevent silicate solution from coming into contact with the skin.

5. Replace the oil fill cap.

6. Start the engine.

7. Run engine at approximately 2000 rpm (for safety reasons do not operate at high rpm) until the engine stops. (Typically the engine will operate for 3 to 7 minutes. As the solution starts to affect engine operation, the operator will have to apply more throttle to keep the engine at 2000 rpm.)

8. Allow the engine to cool for at least 1 hour.

9. With the battery at full charge or with auxiliary power to provide the power of a fully charged battery, attempt to start the engine.

10. If the engine will not operate at idle, the procedure is complete.

11. If the engine will operate at idle, repeat steps 6 through 10 until the engine will no longer idle.

12. Attach a label to the engine that legibly states the following: This engine is from a vehicle that is part of the Car Allowance Rebate System (CARS). It has significant internal damage caused by operating the engine with a sodium silicate solution (liquid glass) instead of oil.

[Gaf The Horse With Tears]

MSRP is not regulated by Federal law. It used to be, until courts struck it down. MSRP only exists to protect the smaller dealers and give them the ability to compete with the larger dealers. If it was agaisnt Federal Law and stricly enforced... could you expalin why people were paying up to twice the MSRP for a Prius during the bidding wars?

[AstralCrux]

Val's car qualified and hers might have a value of $500 (93 Saturn something or another that breaks alot) and she would have participated if she had the money to buy another car. Believe me, she really wanted to.

I'd been looking into the information for this and the government was also offering tax incentives for the purchase of a new car. (the tax incentive started before Cash for Clunkers) I don't take much stock in most of the chain mail that I get, because it's usually crap.

The dealership makes a profit? No shit, and here I thought they were a charity!

[Reaper]

As for the "dealers ripping you off-"

You know that sticker on the window of a car that lists its MSRP? It's illegal to go above that price. That is a federal law. Dealers know this. Dealers know they are LUCKY to get off with just a fine so high that it would shut down most dealerships. Doing a quick BBB search, there were no complaints of violations of this law registered.

He states that the discounts off the car disappeared and went back to full price. Though that is to be expected, I think that was the point he was making.

It's a propaganda email with half truths and misinformation.

And yes, after seeing your points, most of it is trashing the program in general. I normally just go through and delete alot of forwards I get, but found this interesting for a topic.

[Raev]

Raev: I just have to ask... What does the cars ability to ever run have to do with anything?

The car had to be able to be delivered to the dealer under it's own power. Had to be driven in. So it having to run has EVERYTHING to do with it.

[Raev]

He states that the discounts off the car disappeared and went back to full price.

Some manufacturers dealers had various prices marked down based on rebates and incentives in place prior to cash for clunkers. Some manufacturers rescinded the rebates, meaning dealerships weren't able to offer them anymore. The dealership had to pay higher payments for the vehicles when the rebates were rescinded, therefor they had to do the same. The dealership in that situation is just a middle man.

[Raev]

MSRP is not regulated by Federal law. It used to be, until courts struck it down. MSRP only exists to protect the smaller dealers and give them the ability to compete with the larger dealers. If it was agaisnt Federal Law and stricly enforced... could you expalin why people were paying up to twice the MSRP for a Prius during the bidding wars?

When I get back to work on Monday I'll have the salesman that is answering my questions for me chime in on this.

100% of my knowledge about any of this, comes from me walking into our sales building and saying "Hey, come weigh in on this!"

[Gaf The Horse With Tears]

Just keep in mind he is a car salesman.