Ramifications of the cash for Clunkers Program


Ramifications of the Cash for Clunkers Program.

With the implementation of the Cash for clunkers ” Program, an effort to boost sales in the Automotive market and at the same time reduce the national fuel consumption levels, the authors of this nightmare failed to take in all the aspects and their impact on the economy. It is true that many cars deemed as rolling junk were removed from the roads, the owners of most of these fuel consuming dinosaurs were for the most part, people that were ill able to obtain better and more economical forms of transportation. Additionally a large percentage of the funds were used to purchase imports and had a limited impact on domestic automobile sales.

The economic conditions and reduction of income for the average family have already seen deep impact on the financial credibility of a large percentile in our populous. In retrospect, the only people whom were able to take advantage of this new form of stimulus were for the most part; ones who could afford to trade with or without the stimulus incentive. Consequently, a large number of exceptional low mileage automobiles were set for destruction that fell into a price range desirable to the other members of our society, incapable of obtaining primary bank financing.

Many vehicles with less than sixty thousand miles in excellent mechanical and physical condition were removed from the market drastically affecting the availability of low mileage clean automobiles, and convexly driving the price up on the ones still available for retail disposition. Not taking into consideration the large majority of the vehicles set for destruction still had wholesale values upward from $2500.00; in some cases over six thousand dollars. If the dealers were forced to offer the cars with fewer than seventy thousand miles on the wholesale market, and inject them back into the supply pool; it might possibly have saved the government, millions in precious hard earned tax payer dollars and reducing the outlay to only the difference between what the vehicles brought on the wholesale market, and the guaranteed funds provided for in the program.

This program also required the dealers that acquired these automobiles to liquidate them to automotive salvage facilities, for no more than fifty dollars a car. And the mandates required the motors and transmissions to be de-habilitated, so as not to find their way into the transportation world. And even though the dealer could not receive more than $50.00 a car, some of the agents working for the dealers were offered (Required) finders fees from fifty to two hundred dollars per unit over and above the mandated amount, from the salvage facilities to obtain these vehicles. I guess somebody will have a great Christmas!

Imagine if you will, a family that is trying to survive in these monetarily oppressed times needing to obtain a transmission or engine for their only form of transportation. Because of the limited number of acceptable candidates that the engines or transmissions might be obtained from; the remaining used replacement part pricing has been driven up by the basic principals of economical truth, supply and demand.

Now the Automotive industry is faced with another dilemma, where will they find the used cars needed to offer the consumers, now that over seven hundred and fifty thousand automobiles have been removed from the road. The authors of this calamity would have been well suited to stay out of the automobile industry unless it was to find a way to use the monies allotted for the program to infuse the finance industry, thus providing the financial institutions partial loan dollars with mandates as to the loan construction, there by making funds available to the creditably challenged individuals so they may procure a moderate form of transportation, at an affordable rate of monthly payment. In my limited research I have seen that many who find themselves in that situation, could well afford a payment in the 250 to 300 range but find a payment over three hundred an insurmountable task.

True it would have required the government to subsidize the lending institution approximately twenty four hundred dollars per loan, but it would have at least provided the individuals that fell into that condition, a venue to acquire more dependable vehicle for their family needs and still be able to keep their head above water. It may have also saved the tax payers quite a considerable amount of the $4500.00 guaranteed funds by the government to the selling dealers.

We as citizens should have taken the Government out of the business loop and established some sort of panel, or committee, made up of financial leaders in the individual county’s and territories with-in the states, with quarterly rotational membership. Then they could have set up and establish loan processes, determining how much funding would be necessary in a quarterly basis to maintain a non self serving source for financial needs of the communities. After all who better to know its own needs than the business leaders of each community group? ©

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Title :: Ramifications of the Cash For Clunkers Program
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