We’ve been talking a lot recently about the Cash For Clunkers program, and how the program has been successful by some standards, and troubled in other ways. The program ran out of money one week after it launched, and was only re-launched after congress passed another 2 billion dollars for the program.
Now the program is beginning to run out of money again. The Obama administration has announced that the Cash For Clunkers program will end on Monday:
The popular Cash for Clunkers program will end on Monday at 8 p.m. Eastern time, the Obama Administration said Thursday.
As of Thursday, the Administration said the Clunkers program, officially the Car Allowance Rebate System, had recorded more than 457,000 dealer transactions worth $1.9 billion in rebates.
“Applications for rebates will not be accepted after 8 p.m. EDT Monday and dealers should not make further sales without receiving all the necessary paperwork from their customers,” the Administration said in a statement.
The Administration expressed confidence that money would be available to pay all eligible rebates. A total of $3 billion has been allocated to the program.
The Department of Transportation “has been very focused on making conservative assumptions about this program, and it’s precisely why they’ve announced the winddown at this moment,” a senior Administration official said.
The Administration has countered recent complaints of payment delays by saying that many of the applications to the program from dealers have been incomplete and needed additional review or had to be sent back.
Want to take advantage of the program before it runs out? Don’t forget to read our posts detailing the program, and get to your participating dealer before 8pm eastern on Monday!
Also, if you’re signing a deal this weekend, be careful of what you’re signing as some dealers are adding clauses to the contract stipulating that you will have to pay them back for your clunker rebate if the voucher is denied by the government.
Dealers Opting Out Of Cash For Clunkers
In the last week or so a large number of dealers have been opting out of the Clunkers program as they have been having major problems even getting paid for the Clunker deals that they have signed and sent to the government for approval. In a cash important business like the car business, this could be a huge problem for a lot of dealers.
Some dealers.. already have stopped participating in the $3 billion Cash for Clunkers program. On Wednesday, Transportation Secretary Ray LaHood sought to assure dealers that they will be reimbursed for money they have essentially fronted to customers buying cars.
“They’re going to get their money,” he said.
The Greater New York Automobile Dealers Association, which represents dealerships in the New York metro area, said Wednesday that about half of its 425 members had left the program because they could not afford to offer more rebates. They also are worried about getting repaid.
In the Kansas City area, program delays prompted Randy Reed’s Buick-Pontiac-GMC and Nissan dealerships to stop participating in Cash for Clunkers on Monday. Including a dealership in St. Joseph, Reed said his stores had not been reimbursed yet for about 40 deals.
“It seems like a program the government has mismanaged from the start,” he said. “Our number one goal is not do anything to put ourselves at risk with our customers. None of us can afford the kind of losses we’re looking at if we continue participating and don’t get reimbursed.”
I for one am not sad to see the Cash For Clunkers program go. The program, while popular (anytime you “give something away” it’s probably going to be popular), has been beset with problems. The aim of trying to have a positive environmental impact is dubious at best with even environmental groups saying they aren’t impressed. The economic impact isn’t really agreed on either with some experts like Alan Greenspan saying that he didn’t think that the program stimulated the economy. Add to that the fact that the program has probably moved many people into a worse debt situation than they were in previously, and I am actually happy that the program is over!
What do you think? Are you going to be taking advantage of the program in it’s last weekend? Are you glad to see the program go? Do you think all of these dealers with pending deals will get paid, or will the government stiff them? Let us know what you think in the comments!
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{ 2 comments… read them below or add one }
Hopefully it will stay dead for good now. I think the government may end up hanging a lot of dealers out to dry before it is all said and done. The quicker they close the doors on this the better, it has helped the auto manufacturers but I think the value to the dealers is yet to be proven.
kyle´s last blog ..Friday Finance Followers – Cash For Clunkers in the Dump Edition
No one forces these people to take there cars in and trade them off.
Read the fine print when you are buying a car.
Remember if you sign the paperwork and you car does not get approved by the government and the dealer will not get paid ,you will be forced to pay back the 3500-4500 cash Plus you lost your trade in and dont get anything for it.
What fools