PRESIDENT OBAMA, in signing the cash for clunkers program, affirmed that this program would help consumers purchase a more fuel efficient vehicle.
The Car Allowance Rebate System is a new program from the government that will help you pay for a new, more fuel efficient car or truck from a participating dealer when you trade in a less fuel efficient car or truck.¹
However, the cash for clunkers program gives opportunistic dealers and/or individuals
- a chance to bait-and-switch the consumer at best or to commit outright fraud in the worst of scenarios.
- a motive to increase prices on good MPG cars as a result of supply/demand.
- an opportunity to steal your identity through fraudulent websites.
BAIT AND SWITCH
After contacting 25 dealers about trading in cars that obviously do not qualify—per the NHTSA guidelines—not one of them gave an upfront answer and almost half outright lied.
We contacted the dealers using model year 2005 cars, asking specifically about the cash for clunkers program. (According to the official government website, passenger vehicles must also have been manufactured not later than model year 2001; Trucks/SUVs have different guidelines).
- 12 outright lied (“I believe that it does qualify”)
- 13 gave half-truths (“I Do not know off-hand, come on in and we will find out”)
While the latter group—in the most positive light—may be viewed as good salesmanship, buyer beware. There are numerous ads designed to entice you to bring in any car. Here is an advertisement that gives no mention to the guidelines—but implies that any clunker qualifies.
THE CONCERN with these type of ads is with the following fact:
“The law requires your trade-in vehicle to be destroyed. Therefore, the value you negotiate with the dealer for your trade-in vehicle is not likely to exceed its scrap value.”²
Therefore, some cars that qualify for the government program may actually be worth more than the voucher. You would be better off selling your trade-in to the dealer.
Worse yet, there are some reports of people bringing a car to the dealership that fails to qualify, but the car dealer sees potential through the used car market. The dealer gives the customer a $4,500 credit in the final sale receipt to give the look and feel of participation in the cash for clunkers program. But because the car does not qualify, the dealer can simply put that car on the used car market to make a substantial profit—often selling for much more than the $4,500 credit.
SUPPLY/DEMAND PRICE INCREASES
WHILE the main intention of this program is to make fuel efficient cars more affordable, it seems those who crafted this bill sidelined the market economy as a variable. It seems that this government incentive has created additional demand for ‘green cars’ and have pushed the price of fuel efficient cars higher.
With the price increases, some markets give consumers no net benefit. In other words, the additional demand created by these vouchers pushes the average out-the-door price of green vehicles higher than if no government intervention existed–and even if we take into account the $4,5000.00 credit. It seems those who crafted this law forgot that when supply is equal to demand, there is less room for price negotiations.
SCAM SITES STEAL YOUR IDENTITY
SOME WEBSITES claim they will send you a ‘cash-for-clunker’ voucher by filling out a form. However, these sites are designed to steal your social security number and identity. You will never see a ‘voucher.’ This program is between the government and U.S. car dealers. When the dealer gives you a credit for this program, they will receive cash from the U.S. government.
CASH FOR CLUNKERS: HOW TO BUY A CAR in FIVE STEPS
The best way to buy a car is use the power of the market to your advantage. In other words, let dealers complete.
- Gather information: If you do not know your credit score — and you plan to finance a new car — it is essential you obtain your credit report. Get your free credit report and score.
- Get your trade-in value: If you are going to trade a vehicle in, it’s highly recommended you get an independent valuation. Get your free trade-in value for your current car. Only participate in the cash for clunkers program if your trade-in car value is less than $4,500.
- Get competitive pricing (No-Obligation): Obtain online car pricing points from at least two dealerships – use the Autos.com free service to get competing prices from multiple dealers.
- You will get an email with your car prices.
- Reply to the dealer(s) with the higher prices, and kindly tell them another dealer beat their price.
- The dealers with the higher prices will respond with a better deal — and often with a much lower price. Tip: If you do decide to proceed with the car buying–before you enter the dealership–verify by email or phone that the price quoted is the ‘out-the-door-price.’ These magic words should give you the price you will pay after all fees, taxes, incentives and credits are applied.
- Financing: You should apply for a loan before you enter the dealership. It is best to use your own bank if you have a decent relationship with them. You can also apply online via a car loan broker: If you have a credit score above 620, apply for a loan here. If you have a credit score below a 620, you should apply here.
- Independent Quotes: It is essential you obtain independent quotes on the following services. Too often the dealership charges too much for services you can obtain on your own. In other words, you do not have to sign-up for these services in the dealership. (Optional).
- Extended Warranty: Get no-obligation quotes to extend your warranty coverage.
- Auto Insurance: Find out how much you can save by comparing insurance rates online.
DOES MY CAR QUALIFY
Open this list of qualifing cars. Use the drop down menu to find out if your car qualifies for the cash-for-clunkers program. This list only goes back to the year 1990.
Works Referenced
1) http://www.cars.gov/index.php/faq#question-01
2) http://www.cars.gov/faq.html#question-12
POULAR POSTS:
- Cash for Clunkers Recall
- NY Dealers Pull Out of Clunkers Program
- ‘Cash for Clunkers’ Runs Out of Gas
- If A Deal Is Too Good To Be True—Cash For Clunkers
- Does Cash for Clunkers Help the Environment? It’s Debatable
- Auto Dealers Paid for Just 2% of ‘Clunkers’ Claims
- Chrysler to match ‘cash for clunkers’ incentive
- Mazda Dealers Ready for First CARS Transactions
{ 15 comments… read them below or add one }
Great tips! I’m passing this to my friends buying a car. Thanks.
just exactly what i’m looking for… thanks.
Very good article and information. It seems that the majority of vehicles that will qualify for a voucher are pickups and SUVs. Since you only have to buy a new pickup or SUV that gets 2 mpg more to get a $3500 voucher, 5 mpg for a $4500 voucher, it seems the whole thing about helping the enviroment is deceptive.
yo
It is pretty easy to believe that the Feds are messing up the Cash for Clunkers program. The US government has a long history of not looking out for the average guy. But what about the fuel economy initiatives of the DOE and EPA? More specifically, does anybody here know anything about the quality of the data and tips they put up on their website http://www.fueleconomy.gov?
You could do all this, or you can just find someone your somfortable with and buy a car from him aor her and trust them. Its how we put food on our table, consumers need to stop listening to this jargen, we dont rip people off, and kelly blue book is bull****. this is why were in trouble because you listen to d***head web sites like this one and it makes us look bad.
I disagree “pissed off car salesman.” I have yet to interact with a dealer that was 100% honest and hasn’t tried to screw me in one way or another. Maybe you’re right and I just have a bad luck of the draw, but I have yet to see that to be true. I was naive once but once I got my $50,000 settlement it was the dealer who lost in the end. Live and learn.
And btw your comment doesn’t do much justice for making car dealers not “look bad.”
“Pissed off car salesman” is dead wrong. The entire Auto Sale industry is built on deception. Lets get this straight…the ONLY people that will benefit from this program are the car dealers. This is what is going to happen, you go to your local dealer and you pick the car you want. The dealer has adjusted the prices to maximize the profits: translation – keep the rebate you’re entitled to instead of giving you the benefit of the rebate. The dealers will sell you the payments: translation – give you a low enough payment over several years to give you the perception you’re getting a deal. You get robbed of your rebate and the dealer reeks in monstrous profits while begging Uncle Sam for handouts. These Super Dealers are everywhere and they cry that they are not making any money. They openly practice fraud in their showrooms by displaying fraudulent “dealer” invoices and false advertising in our local papers.
Thanks you for this great article. I just did the car buying process and I saved $3,000.00 from a quote I got yesterday. I know why the salesman hate you. It was really easy and I didn’t have to negotiate but say another dealer wants to give me the car for less. What can you do?
I’ll pass this article to friends I know that want to buy a car. Thanks again.
” * 12 outright lied (”I believe that it does qualify”)
* 13 gave half-truths (”I Do not know off-hand, come on in and we will find out”)”
Sadly, lies, deception, half truths and the sin of omission have become so prevalent in western society that we can no longer trust anything told to us by our politicians, preachers, media, car salesman…
We’re left to learn it all for ourselves.
Consumers are waking up finally. The car salesman has become a thing of the past. The hidden guy in the back office is the thief. The guy that talks with you is the “Greeter” He may call himself the salesman, but he does nothing, but maybe show you how to turn on the radio, if he knows how to do that. Some one in that back office makes sure that dealership makes money. It is all about the money. There is no such thing as a good deal, they poison your mind to think you are getting a deal. Car buying is an awful experience. Your lied to, deceived,brainwashed, and just going to get ripped off. This whole cash fo clunkers is another look at how bad this country is being run. The american people are stuck, all we can do is find a way to survive.
I just put money down on a new car. I was told there were no rebates. I went home and searched the internet and found Toyota had a $1,000 rebate. I called Toyota and asked how to get my rebate. They asked wher I saw it. I told them on their buyatoyota.com page. Half an hour later the rebate was removed from the webpage. I don’t get the rebate. I am not mad at the dealer I am mad at Toyota. I did make a copy of the web page before it was changed, but what good does it do me.
I had a bait and switch with my cash for clunkers. The dealership said no problem to my car choice and I signed the agrement and put down a deposit. The car never came in. The Honda dealership did not return my calls. Then 3 days prior to the cash for clunkers deadline they told me my car will not arrive until after the deadline but they have an upgraded model for $3000.00 more. Hoping that I will grab it knowing I amloosing the cash for clunker money. I asked for my deposit back.
This is why America did not support the federal bail-out for the auto industry. Car salesman.
I wish wish WISH I had come across this article before I went in thinking I was going to take part in the program! Beware people! The scammers are out there, and there are more of them than you care to think!!