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I’ve done some research across the Internet and gathered a list of Pros and Cons regarding the “Cash For Clunkers” program. I made a list for the individual who’s considering buying a car through the program, and also a list for the “Collective Soul”, for us to consider the overall impact in the universe, as described in this article.
So far the Pros and Cons add up to this: Individual: 4-Pro, 6-Con. Collective Soul: 6-Pro, 12-Con.
1. $4,500 + other incentives you may be able to save a lot of money on a new car purchase, if you push for more incentives besides just the $4,500.
2. Less Gas. You could save a lot of money at the pump.
3. Cut down on repair costs.
4. Environment – your driving will cause less pollution.
1. Insurance – it usually costs more to insure a new car.
2. New Debt – it is wise to go into more debt in your financial situation?
3. Wasted parts – your old car will be destroyed. It’s questionable whether or not some of the parts will be recycled.
4. Value added to your old clunker. The used car market may heat up due to decreased supply. It’s possible that your used car may be worth more than the voucher after the trickle-down of this Cash for Clunkers program.
5. More gas. You might be inclined to drive more knowing that your car gets better gas mileage.
6. Comfort Zone. You KNOW your old car. And you know what repairs you’ve done to it and what’s likely to go wrong.
FOR THE COLLECTIVE SOUL:
1. Increases sales at auto dealers.
2. Surge in new-car sales to consumers who would not otherwise purchase at this time. For the upper and middle income people with good enough credit to get a car loan, gives them a down payment.
3. Old vehicles are typically less fuel-efficient than their modern counterparts, so removing them from the road and replacing them with newer cars would likely decrease individual owners’ and the nation’s consumption of oil.
4. Old vehicles typically do not run as clean as new vehicles, so removing and replacing them on our roads would likely decrease vehicle exhaust emissions, lessening the impact on the environment.
5. Old vehicles were not held to the same crash and safety standards as new cars are held to and tend to be less safe in an accident. Replacing them with newer vehicles could lead to fewer injuries and fatalities in automobile accidents.
6. Automakers are struggling right now, especially domestic automakers. Providing a financial incentive to buy new cars would likely lead to increased car sales, which would generate revenue for the automakers and help them weather the economic downturn, while stimulating the economy at the same time.
1. Artificial, unsustainable boom in auto sales.
2. Crushing those older running autos makes those parts and vehicles harder to get, and consequently more expensive.
3. Many companies build parts and upgrades for older vehicles. A reduced supply of older vehicles would adversely affect their sales.
4. The automotive restoration and customization industry relies on old cars as the basis of their products. A reduced supply of older vehicles would adversely affect their sales.
5. For lower income people, makes it harder to find and maintain an older vehicle.
6. Convincing low income people, those who drive “clunkers”, to go out and finance a new car when we are still in the midst of the consequences of easy credit in the housing market.
7. Drop in vehicle donations to charities. Some charities that rely on vehicle donations for funding say they’re receiving fewer cars and trucks, because donors change their minds and decide to trade the vehicles in on the Cash for Clunkers program.
8. Some older vehicles actually get better gas mileage than some newer ones. Replacing them would then negate any benefit to the environment or the U.S.’ oil consumption problem.
9. Encouraging consumers to scrap working vehicles could shorten the lives of cars and encourage the production of new cars, which would have a larger adverse affect on the environment that keeping the older car.
10. This proposal would not necessarily benefit the automakers that are in the worst financial shape, as there is no guarantee that consumers would use their incentive to purchase a vehicle from one of those manufacturers and not another company.
11. The program is not restricted to AMERICANS, and not restricted to AMERICAN made vehicles, but it is coming from AMERICAN taxpayer money.
12. It is costing more than $4,500 per trade-in. It is costing approximately $6,000 per vehicle, when factoring in the cost of the extra government staffing, office space rent, equipment, employees, web development, printing of forms, etc.