Cash for Clunkers Program May Get More Funds – But is the Program Good for Consumers?

Cash for Clunkers Funds

Earlier today there were reports that the Cash for Clunkers program was being suspended due to initial funding of $1 billion running out. In only one week! Wow. There’s obviously a huge demand for this program, which was intended to last up until November 1. I have to admit, I’m surprised it was so popular, and surprised cash has run out.

In a surprising move, the Obama White House chimed in with word that they are going to try and keep the program afloat with more funding. I assume this means Congress will get to work on this as soon as possible, and the Cash for Clunkers program won’t be going broke.


According to the Cash for Clunkers website, the program still has plenty of funds. Talk about your slow to update graphically-displayed stats FAIL.

Basics of the Cash for Clunkers Program

The Cash for Clunkers was introduced in late June as a program that would not only get more low-emission vehicles on the road (the thought being this would help the environment), but it would also help consumers (all of us waiting around to buy a new car) as well as the struggling auto industry. Three-for-one, baby!

The program works roughly by giving dealers a $3,500 or $4,500 credit that they can turn around and give to consumers who do the following: trade in a high-emission vehicle, aka “clunker”, and use the credit to buy a lower emission new vehicle. See more specifics at Cash for Clunker bill or see my Cash for Clunker Q&A.

Doubts About the Program Actually Helping Consumers

It’s obvious by the demand for the funds that the program was being used. But are the funds being put to good use? Do the people who currently own vehicles worth less than $3,500 need to go out and purchase or lease a new car? When I blogged about this program on the Quicken Online blog, I walked through the different questions to help you decide if Cash for Clunkers was for you. They were (along with my macro-economic commentary):

  1. Do you have a clunker? See the rules at my post on the Cash for Clunker bill.
  2. Is your clunker worth less than $3,500? Hopefully no one is participating in this program that could have received more for their clunker than the allotted $3,500.
  3. Can you negotiate? My suspicion, and the word on the street, is that dealers are pulling or de-emphasizing their own incentives and rebates. So, does the average consumer know this? Even if they’re getting a sweet deal by trading in a worthless clunker, are the dealers taking it all on the other side of the transaction by not offering normal new car deals?
  4. Can you afford a new car? Lastly, should the US Government be in the business of encouraging more debt? Isn’t that partly why we’re in our current recession? How many of these consumers are laying down cash for their new ride? Likely not many. And the folks rolling around in a $3,500 vehicle before the program likely should not be financing a new ride. Just my take.

It would seem to me that a small number of people actually fit the bill (pun!). So how can it be that the funds have run dry so quickly? My theory is that many who shouldn’t be involved with this are. And thus, the program is hurting most of the consumers who are involved.

What are your thoughts? Should the program be funded with more tax-payer dollars? Was it even a good idea to begin with?

Last Edited: April 10, 2012 @ 6:46 pm The content of is for general information purposes only and does not constitute professional advice. Visitors to should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Philip Taylor

Philip Taylor, aka "PT", is a CPA, financial writer, FinCon CEO, and husband and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.

Comment Disclosure: These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.


  1. Very thorough and impartial view of the possible pros & cons of this program… nice work PT.

    Personally I lean toward the notion you eluded to in the end of the article. In the long run the only tangible thing I see consumers ending up with is more debt.

  2. Thanks, Matt. I’m looking fwd to seeing if they refund it.

  3. “Can you afford a new car? Lastly, should the US Government be in the business of encouraging more debt? Isn’t that partly why we’re in our current recession? How many of these consumers are laying down cash for their new ride? Likely not many. And the folks rolling around in a $3,500 vehicle before the program likely should not be financing a new ride. Just my take.”

    Ummm….don’t some economists blame our current home problems on Clinton’s FORCING OF BANKS to lend to people who couldn’t afford the home they were buying? The answer is yes, but links aren’t included lol

  4. My guess is that you’re right – far too many people who should not have been buying a new car decided to anyway because of the “incentives”. My guess is that the congress and our president will find a way to get the program some more money and have it reinstated. Unfortunately.

  5. thom young says:

    horrible idea just like all the bailouts that were nothing but a banker takeover in disguise, and don’t be fooled by this sucker’s rally, sell all your stocks and buy gold and its related shares, the dollar is going down big time, notice that the stocks are going up right now, but your purchasing power isn’t, obama is being revealed for the puppet that he is, just a pawn in the international bankers cabal

  6. Gerald Wade says:

    Who was the genus that figured out that the people who could afford new cars were the ones driving the clunkers and needing help improving there gas mileage or buying a car. The Cash For Clunkers program will not help the people who really need help.

  7. Alexander says:

    To me this has no win-win situation, but rather its to slow down the Depression we seem to be going into. I like many others see this as another debt ridden legislation but I also see how fixated Americans have become with been more than their status gives them ability to be. To much TV of rich people I guess.

    To think of it, I don’t remember my middle income family back in the 70 and 80 ever buying a new car, mostly 2 and 3 year old and holding them for easy 7 to 10 years. I for one have kept that idea, as long as the car is kept clean and maintained its really the same car as when it was new, sure a nice paint job and some detailing makes more sense than getting saddle with another expensive debt.

    As my dad and mom still say, Debt is bad, no matter who much marketing hype they do, even education debt is bad considering that so few professions make any real capital gain to a person.