1) If I have a car that "qualifies", you could assume that it's paid off, right? Who's going to finance a 10 year old gas guzzler? No one.
So I should take my fully-paid asset to get "cash for the clunker", use that money toward a new, more-fuel- efficient car, likely incurring a bit of debt for a new car that depreciates 20% in the first 6 months. Meanwhile, over that 6 months, I've pretty much only paid the interest on the loan, with virtually no principal paid off. My personal balance sheet takes quite a hit.
Our lawmakers need another accounting lesson. Those with the paid-off clunkers are the financially-savvy in society.
2) How much does this cost the govt, and how much do the consumers save?
If the new car gets 10 mpg more than the clunker, that saves the consumer about 400 gallons of gas/yr. The Fed and State tax on that gas therefore wont be collected (assume $ 0.20/ gal Fed tax?). That's $ 80/yr in federal tax, plus a bunch in State tax, that wont be collected, not to mention the actual cost of actually paying for the clunker.
Sure, the consumer saves $ 1000 in fuel cost, right (400 gal * $2.50/gal)?? Well a $ 20,000 loan for the new car costs you $ 800/yr in interest. So the money you save by BEING GREEN, goes through your pocket straight to the BANKS. And because your state is bankrupt, the loss in tax revenue from NOT buying gas causes them to raise your sales and property taxes.
Ok went to look at the site again. The above is still true, BUT since you only get the value of the voucher to trade in the auto I don't see anyone with one of those cars to take the offer.ROFLMAO I haven't found a average car yet that qualifies ???????????