2009-07-30 / Opinions

Even with government's Cash for Clunkers, good horse-trading sense is still required

By KIP BURKE news editor

If you have an old gas-guzzling truck or car sitting around, there's a chance that you could get a deal on a brand new vehicle with the new Cash for Clunkers plan. This being a government plan, of course, good horse traders know there's also a really good chance you won't.

I reckon you can get a good deal if you, the customer, understand the 136 pages of complicated government restrictions on the government's money, and you also understand that car dealers are still car dealers when it comes to separating you from your money, and act accordingly.

In other words, horse-trading rules are still in effect, folks. This ain't a freebie, and it can come back to bite you. On top of that, taking on new debt in this economy is pretty chancy, no matter how much money they knock off the sticker.

New car dealers say they're seeing customers lining up now that the U.S. government's Cash for Clunkers plan is in effect, and that's good. Formally known as the Car Allowance Rebate System, the $1 billion program is aimed at reviving the country's auto industry by encouraging consumers to replace their gas guzzlers with more-fuelefficient vehicles. Sounds good in theory, doesn't it?

But to qualify, your old vehicle has to get less than 18 miles per gallon, be newer than 25 years old but not so new it's worth more than $3,500 or $4,500 in trade. You have to have owned, registered and insured the clunker for a year, and be able to prove it. You don't get the Cash for Clunkers money on top of any trade-in value, because Clunker turn-ins are crushed, not sold. And that's just the high points - the government released, I am not kidding, 136 pages of rules, exclusions, and gotchas.

If you and your old truck or car manage to fit through all those restrictions, you could get a good deal buying a new vehicle. Some new-car dealers are advertising up to $4,500 additional discount on some of their vehicles. That sounds good, but don't let your guard down or your bargaining smarts at home. The smart horse trader has been getting very healthy discounts on trucks and cars for months anyway.

In fact, the experts are saying that smart car shoppers shouldn't even mention that they're turning in a clunker when they're making the deal. Horse trade to get your best price, they say, and only then introduce the fact that you're doing a clunker turn in. (When they ask if you have a trade-in, you can honestly say no. The Clunker program is a turn-in-and-crush, not a trade-in, and it's not the same thing at all.)

Don't let the idea of "free" money blind you to good business practices. With all the government restrictions, some car dealers are having customers sign two contracts - one with the clunker cash figured in, and one without it - "just in case the car you turn in doesn't qualify." Any horse trader will tell you it's not a good idea to do that.

Now the latest wrinkle: the government is admitting that you may have to pay taxes on the $4,500 clunker cash if you take it. Only the government would think of doing business that way.

Good horse traders, I believe, will let that overpriced government mule stay in the barn, and leave richer and wiser on the horse they rode in on.

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