Feeling bad about missing out on the cash for clunkers deal. NOT SO FAST.

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=2 0$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 lets 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 $300 0 that you paid for the car, along with the 5 years of
interest on the car loan but lets 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.





The POSITIVE results of "Cash for Clunkers":
It’s taken 87% of the Obama bumper stickers off the road...

 

so true handyman so true

 

well i got 4500 dollars for a first gen cummins with blowed motor gutted dribeline except the transfer case and most of the good interior parts sold.. worked greeat 4 me..