money that the government throws around at our problems. Still though it bugs me. We are making a LOT of these loans. Some to members that can afford a new car or were planning to buy anyway, and I am fine about that. More power to you. The people I am worried about are the ones who can barely afford the cars they drive now who feel that this "free money" is too good an offer to pass up. They are, for the most part, trading in cars and trucks that are in fairly decent condition, are relatively reliable and most importantly...PAID FOR! Even after Uncle Sam kicks his $4500 into the deal most people end up with a minimum of $15,000 financed, or in cash flow terms, around $300 a month. Add in the fact that they will also need to carry full coverage insurance and you can probably kiss close to $400 goodbye each month to pay for this amazing deal. Now, I know that this is a fantastic program for the auto dealers, who are trying to remember the last time they didn't have to put a buyer in a choke hold to test drive a NEW car. I know that the manufacturers are elated because buyers are looking at the glut of inventory they filled the dealer's lots with the past 2 years as their golden ticket to the $4500 party. Insurance agents and the big auto insurance companies are even winners as most of us celebrate the day when the last payment is made on our "clunker" and can drop the coverage a little lower than the bank would allow and the new car certainly gets the phones at Geico ringing. Poor little lizard. Not even sure how he holds that big heavy receiver. So who loses with this program and why would I even waste 10 minutes venting about it...the people who go out and put themselves into a new car who had a perfectly reliable one already leaking oil in the garage, that's who. People who lay in bed and wonder is there is a pink slip tucked in behind their punch card. People who so far have survived the cuts at work or have only had to deal with a few less hours per pay. People who so far have made it and think that this is a sign from above that the worst is over and the smoke is clearing. I am an optimist, really I am, but even I can't look someone in the face and tell them that its all casual dining and imported beer from here on out. We are not out of the woods yet people. In fact, we might not have even gotten into the thick, machete and Deep Woods Off section yet. I know it isn't Washington's job to keep all the little buyers safe and out of harms way, I am vehemently against their meddling in most cases. But I also don't think that dangling a shiny 4 cylinder carrot in front of starving rabbits is the best way to solve the problem either. Eventually that 2002 Explorer that you just had to have in 2006 will need replaced, I agree with that Billy, but remember, you used to love her too...and the 2009 Caliber will get hit by the ugly stick too someday....and how sure are you that widgets will keep selling and the plant will stay open. Sorry to be a realist Billy, but I really don't want to repo your new car next year. You can't get your clunker back once it has been "rendered inoperable"...
Tuesday, August 4, 2009
Cash for Clunkers...
Okay...okay...I know, why in the world should I care about the fact that the "Cash For Clunkers" program just got another $2 Billion. I run a credit union and we are in the auto lending biz. Anyway, it isn't real money right, just the play 
money that the government throws around at our problems. Still though it bugs me. We are making a LOT of these loans. Some to members that can afford a new car or were planning to buy anyway, and I am fine about that. More power to you. The people I am worried about are the ones who can barely afford the cars they drive now who feel that this "free money" is too good an offer to pass up. They are, for the most part, trading in cars and trucks that are in fairly decent condition, are relatively reliable and most importantly...PAID FOR! Even after Uncle Sam kicks his $4500 into the deal most people end up with a minimum of $15,000 financed, or in cash flow terms, around $300 a month. Add in the fact that they will also need to carry full coverage insurance and you can probably kiss close to $400 goodbye each month to pay for this amazing deal. Now, I know that this is a fantastic program for the auto dealers, who are trying to remember the last time they didn't have to put a buyer in a choke hold to test drive a NEW car. I know that the manufacturers are elated because buyers are looking at the glut of inventory they filled the dealer's lots with the past 2 years as their golden ticket to the $4500 party. Insurance agents and the big auto insurance companies are even winners as most of us celebrate the day when the last payment is made on our "clunker" and can drop the coverage a little lower than the bank would allow and the new car certainly gets the phones at Geico ringing. Poor little lizard. Not even sure how he holds that big heavy receiver. So who loses with this program and why would I even waste 10 minutes venting about it...the people who go out and put themselves into a new car who had a perfectly reliable one already leaking oil in the garage, that's who. People who lay in bed and wonder is there is a pink slip tucked in behind their punch card. People who so far have survived the cuts at work or have only had to deal with a few less hours per pay. People who so far have made it and think that this is a sign from above that the worst is over and the smoke is clearing. I am an optimist, really I am, but even I can't look someone in the face and tell them that its all casual dining and imported beer from here on out. We are not out of the woods yet people. In fact, we might not have even gotten into the thick, machete and Deep Woods Off section yet. I know it isn't Washington's job to keep all the little buyers safe and out of harms way, I am vehemently against their meddling in most cases. But I also don't think that dangling a shiny 4 cylinder carrot in front of starving rabbits is the best way to solve the problem either. Eventually that 2002 Explorer that you just had to have in 2006 will need replaced, I agree with that Billy, but remember, you used to love her too...and the 2009 Caliber will get hit by the ugly stick too someday....and how sure are you that widgets will keep selling and the plant will stay open. Sorry to be a realist Billy, but I really don't want to repo your new car next year. You can't get your clunker back once it has been "rendered inoperable"...
money that the government throws around at our problems. Still though it bugs me. We are making a LOT of these loans. Some to members that can afford a new car or were planning to buy anyway, and I am fine about that. More power to you. The people I am worried about are the ones who can barely afford the cars they drive now who feel that this "free money" is too good an offer to pass up. They are, for the most part, trading in cars and trucks that are in fairly decent condition, are relatively reliable and most importantly...PAID FOR! Even after Uncle Sam kicks his $4500 into the deal most people end up with a minimum of $15,000 financed, or in cash flow terms, around $300 a month. Add in the fact that they will also need to carry full coverage insurance and you can probably kiss close to $400 goodbye each month to pay for this amazing deal. Now, I know that this is a fantastic program for the auto dealers, who are trying to remember the last time they didn't have to put a buyer in a choke hold to test drive a NEW car. I know that the manufacturers are elated because buyers are looking at the glut of inventory they filled the dealer's lots with the past 2 years as their golden ticket to the $4500 party. Insurance agents and the big auto insurance companies are even winners as most of us celebrate the day when the last payment is made on our "clunker" and can drop the coverage a little lower than the bank would allow and the new car certainly gets the phones at Geico ringing. Poor little lizard. Not even sure how he holds that big heavy receiver. So who loses with this program and why would I even waste 10 minutes venting about it...the people who go out and put themselves into a new car who had a perfectly reliable one already leaking oil in the garage, that's who. People who lay in bed and wonder is there is a pink slip tucked in behind their punch card. People who so far have survived the cuts at work or have only had to deal with a few less hours per pay. People who so far have made it and think that this is a sign from above that the worst is over and the smoke is clearing. I am an optimist, really I am, but even I can't look someone in the face and tell them that its all casual dining and imported beer from here on out. We are not out of the woods yet people. In fact, we might not have even gotten into the thick, machete and Deep Woods Off section yet. I know it isn't Washington's job to keep all the little buyers safe and out of harms way, I am vehemently against their meddling in most cases. But I also don't think that dangling a shiny 4 cylinder carrot in front of starving rabbits is the best way to solve the problem either. Eventually that 2002 Explorer that you just had to have in 2006 will need replaced, I agree with that Billy, but remember, you used to love her too...and the 2009 Caliber will get hit by the ugly stick too someday....and how sure are you that widgets will keep selling and the plant will stay open. Sorry to be a realist Billy, but I really don't want to repo your new car next year. You can't get your clunker back once it has been "rendered inoperable"...
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Agree, Agree, Agree! We have a '99... true clunker, but I'm still not ready with things the way they are to lock into a payment just because it gets a few extra MPG's. I'm sure when it dies, I'll wish I had that extra government "free money" to put towards my next car, but hey, I'm part of the true "working" class and don't really expect the government to just give me money...
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