Cash For Clunkers

I was coming into work this morning when I heard on about four different radio stations how successful the "cash for clunkers" program is. So successful, that they have ran out of funding for it, and have already got another billion dollars approved for it. Being that I have friends that are in the car business, I'm glad to know that business is picking up for them. Here were a few things that disturbed me:

1) Your vehicle has to get 18mpg or less to qualify, NEW vehicle purchased has to get at least 22mpg. What if you have a car that gets 19mpg, and you're looking at one that gets 30mpg? Are you just SOL? It's a substantially better mileage increase, yet you would not qualify.

2) I Googled "cash for clunkers", and the first two that came up were Honda's website and then Toyota's. Now I admit that both are decent at trying to produce American jobs, but the end dollar still goes overseas. So we have a government program, funded by American tax dollars, we have American car manufacturers that are filing BK, why didn't we use this program and gear it towards DOMESTIC purchases?

3) I'm hearing mixed reports....some say that getting approved is next to impossible, but on the other hand someones getting approved as they've run out of funds.

Here are a few things that are genius about it:
1)One of the major problems in the car business hasn't been finding customers, it's been getting banks to buy the note for those customers (getting them approved). One of the major factors for an approval is the LTV (Loan to Value Ratio). How much are they borrowing vs. how much is the asset worth that they are purchasing. Well, with a $4500 "bonus", getting the LTV to make sense is a heck of a lot easier than without it.

2) It has definitely stimulated the car business as a whole, for now.

Most people consider there biggest assets in this order: 1) Home 2) Vehicle 3)Boat/RV 4) Personal possessions. So if you're home is essentially more important than your vehicle (makes sense, unless it has a bathroom in it....), then why didn't we come up with a similar solution for the housing market? "Match payments" You're behind 4 payments...., you come up with two, they come up with two.... Of course the best solution was brought up in the last blog entry. If you're taking our money in taxes, we have to pay that money back through our taxes, why didn't we get our break instead of the banks? Politics. If you give American citizens money, you can't send "Guido" in afterwards to get some of it back through contributions etc.... If you give a company that kind of money, the return back from those companies via contributions etc. can be huge. Food for thought.