Buy a $500 junker and trade it in. You're still 4k ahead.
That's one of the interesting side-effects of the program. There nearly
aren't any $500 junkers anymore! And woe to the person who has saved up two or three grand and wants to buy some basic transportation to get to work.
That's because suddenly that clunker is worth up to $4500 at the dealer,
no matter how little it would've gotten six months ago. And once you trade it in, it's sent to the junk yard, taking it off the market. So you've got an increasing demand for a decreasing supply. It's actually a fascinating economic experiment to see play out.
But, to me, that's the shame of the program. Not only is encouraging a lot of people to take out loans on a brand-new car when they probably shouldn't, it's also hurting those who would otherwise buy an el-cheapo car that's actually within their budget.
On the plus side, it
is increasing the overall MPG in the country, and it
is getting money swirling around in the economy again. But I'm sure there are programs we could've done instead that also helped the environment and economy, but that
rewarded responsible consumer behavior and discouraged irresponsible consumer behavior, instead of the other way around.
ld:
JJ
