Cash for Clunkers bill in Congress is Going to Hurt Low Income Families

ou may have recently heard about the bill in Congress called "Cash for Clunkers." This bill is to make a government incentive for Americans to trade in their used car for a more efficient vehicle. This bill will only be for the purchase of new vehicles. While the motives of the bill, to modernize a greater percentage of US vehicles to be more fuel efficient and increase sales in new cars, the bill does not take into account the harmful effect it will have for low income families and subprime customers.

With the current credit crisis most people are unable to get financing on a new car. Banks and lenders have tightened their credit policies, and consumers who would have been able to qualify for a loan in the past are unable to do so with the current credit policies. Buy Here Pay Here credit by dealerships like Mark's Auto Sales have given many families opportunities to get a loan when they need to buy or replace their vehicle. However, with the current form of the bill, we are unable to fulfill the rebate for the Cash for Clunkers program, as it only applies to new vehicles.

From another standpoint, the Cash for Clunkers program will negatively affect the inventory of used cars driving up the prices of all vehicles outside of the affordable range for low or even middle class Americans. Currently, there is a shortage of used vehicles available for sale as Americans are driving their cars for longer instead of trading it in for a new vehicle. Cash for Clunkers will take perfectly good cars and take them out of the retail market.

These are the low cost vehicles that low income families are able to afford. Cash for Clunkers would further reduce the supply of used cars and increase the prices of the remaining used cars.

Natural attrition will get rid of these vehicles. I’ve seen it for the 32 years that I’ve been in the auto industry.

A final consideration, to consider is, while our domestic auto manufacturers are struggling, how much of this $9 billion incentive program will go to the purchase of foreign brands? It is a large investment by US taxpayers for this Cash for Clunkers program.

Are you sure this is a program you want your tax dollars supporting?