Blogs by William Manchee
Cash for Clunkers Bad Idea for Many Consumers
8/3/2009 5:09:12 PM
The Cash for Clunkers program has lured many consumers into debt that they cannot afford.
Most consumers who've been through bankruptcy, and we're talkng about millions, will tell you they never want to use credit again. To that end when they buy a car and pay it off, they keep it as long as it runs to avoid incurring debt. These people have been sucked into the credit threadmill and don't want to suffer that fate again.
Then Congress in it's infinite wisdom comes up with this Cash for Clunkers program. This is like offering a drink to an alcoholic. How can they turn down $4,500 or $9,000 if you count the auto company matching program. So, they take the bait and now have a nice new car but also have $10-15,000 of debt probably at a high interest rate.
I have a 1998 Nissan Altima that runs as good as any car on the road and its paid for. Many cars like this will be destroyed and crushed and their owners will be saddled with big car payments that they can't afford. If their financial situation is marginal this new payment could be a great hardship and the source of considerable emotional distress.
It's a shame that our economic recovery depends on making consumers buy things they don't need and incuring debt they can't afford.
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