The story below was just forwarded to us from TMS. The bottom line is as follows:
-The CARS program will end Monday August 24, at 8 PM EDT.
-All deals must be submitted by that time -Dealers are still able to resubmit rejected applications after the deadline
Showing posts with label Cash for Clunkers. Show all posts
Showing posts with label Cash for Clunkers. Show all posts
Thursday, August 20, 2009
Monday, August 10, 2009
Don’t let the Dealer Clunk You With Your Clunker
Since the U.S. Senate voted an extra $2Billion of our taxpayer’s money toward Cash for Clunkers, the insane rate of frenzied new car sales has not slowed. In over 40 years as a car dealer, I’ve never seen an incentive that has so energized the retail auto industry. The CARS program has so exceeded the expectations of our government, the auto manufacturers, and car dealers that auto inventories are evaporating at a rate so fast that dealers will be virtually out of cars in the next few weeks. Auto manufacturers will not be able to gear up production fast enough to keep cars on dealers’ lots.
Anytime you see buyers panicked into buying based on a program that’s almost too good to be true, you see buyers being taken advantage of. I’ve listed some of the main dangers you may encounter if you decide to trade in your clunker before Labor Day, September 7, which is when the program is scheduled to end. I believe it will end sooner because the extra $2 Billion will be gone before that.
(1) Confirm for yourself that your old car qualifies. You can get this information by clicking on www.Cars.gov or calling the toll free number 866 CAR-7891. The basic qualifying rules are that your car must be less than 25 years old, get no better than 18 miles per gallon, and be continuously owned and registered by you for at least one year. It also must be continuously insured for one year, but not necessarily by you. You may have given your old car to your child or grandchild. Knowing that your car does qualify and for how much, gives you an edge in the price negotiation.
(2) Do not tell the dealer you are negotiating a price with that you own a clunker. Tell him that you have no trade-in. When dealers know that you have a clunker worth $4,500 or $3,500, they see “dollar signs” and extra profit in their pockets. Surveys show the average profit dealers are making on sales with clunker trades is 20% higher.
(3) Get at least 3 competitive price bids. If you are Internet savvy, you can get a dozen or more price quotes in less than the time it takes you to drive to 3 dealerships. Your Internet price is usually the lowest price a dealer will sell a car for.
(4) Do not sign a form making you responsible for the government not paying the dealer the clunker money. Many dealers are requiring that customer sign a form accepting the responsibility to reimburse the dealer if the CARS program does not pay the dealer all the money that he expected. In many cases customers are signing these forms along with the myriad of others, not even being aware. If the dealer won’t budge on this, buy your car from another dealer.
(5) Demand to see the actual price the dealer is getting for the salvage on your vehicle. The government does not require that the dealer take this amount off the price of the new vehicle, but it does require that the dealer inform you of the “estimated” salvage value of your vehicle. This is so that you will have this information in negotiating the best price of the new vehicle. However, this is a big oversight in the government program and does not accomplish its intent. The estimated price means nothing and can be far from the actual price he sells your car to the salvage company for. The average price so far given as estimates to clunker owners is $75. In my dealership, with about 130 clunkers traded for so far, we are averaging about $450 per clunker. We allow the full salvage value less $50 [specified by the government]. Insist that the dealer take the full salvage price he got for you car [less $50] off the price of the new one.
(6) If you are buying a used car, be sure it’s not a clunker trade-in. It’s illegal to sell a clunker trade-in to anyone except an authorized salvage yard. But, with all the confusion going on and the desperation of many dealers, it’s likely that clunker trade-ins have been and will be sold. I’m seeing an unusually large number of old cars advertised for sale. If you see a used car advertised for under $10,000 be very, very careful. Check first to see if it would qualify as a clunker and, if so, do a CarFax title search and contact the previous owner. You may be able to get this information from the government, but their computers are so overwhelmed, it’s doubtful. Even if the old car you’re considering is not a clunker trade-in, be very wary of paying $6-$10 thousand for an old car that is worth a few hundred dollars for salvage.
(7) New vehicle inventories are approaching their lowest levels ever. You will be pressured by many dealers to buy a car you don’t want because the one you do is not available. They will tell you that, if they have to order the car, the cash for clunker program will have expired. This may be true but do you really want to spend $26,000 or for a new car that you really don’t wan to drive?
(8) 60 months is the minimum lease under the CARS program. This is another big mistake by the government. You should not lease a car for 60 months or more, but you have no choice with CARS. When you sign any lease contract, you are obligated to make a lease payment for every month the lease is for. If the car turns out to have big mechanical problems, you still have to make 60 lease payments. If you die, your estate must make the rest of the lease payments. If you become disabled, you’re still obligated. If you buy or lease another car before the 60 months is up, the unpaid lease payments are added to the price of that new car.
Anytime you see buyers panicked into buying based on a program that’s almost too good to be true, you see buyers being taken advantage of. I’ve listed some of the main dangers you may encounter if you decide to trade in your clunker before Labor Day, September 7, which is when the program is scheduled to end. I believe it will end sooner because the extra $2 Billion will be gone before that.
(1) Confirm for yourself that your old car qualifies. You can get this information by clicking on www.Cars.gov or calling the toll free number 866 CAR-7891. The basic qualifying rules are that your car must be less than 25 years old, get no better than 18 miles per gallon, and be continuously owned and registered by you for at least one year. It also must be continuously insured for one year, but not necessarily by you. You may have given your old car to your child or grandchild. Knowing that your car does qualify and for how much, gives you an edge in the price negotiation.
(2) Do not tell the dealer you are negotiating a price with that you own a clunker. Tell him that you have no trade-in. When dealers know that you have a clunker worth $4,500 or $3,500, they see “dollar signs” and extra profit in their pockets. Surveys show the average profit dealers are making on sales with clunker trades is 20% higher.
(3) Get at least 3 competitive price bids. If you are Internet savvy, you can get a dozen or more price quotes in less than the time it takes you to drive to 3 dealerships. Your Internet price is usually the lowest price a dealer will sell a car for.
(4) Do not sign a form making you responsible for the government not paying the dealer the clunker money. Many dealers are requiring that customer sign a form accepting the responsibility to reimburse the dealer if the CARS program does not pay the dealer all the money that he expected. In many cases customers are signing these forms along with the myriad of others, not even being aware. If the dealer won’t budge on this, buy your car from another dealer.
(5) Demand to see the actual price the dealer is getting for the salvage on your vehicle. The government does not require that the dealer take this amount off the price of the new vehicle, but it does require that the dealer inform you of the “estimated” salvage value of your vehicle. This is so that you will have this information in negotiating the best price of the new vehicle. However, this is a big oversight in the government program and does not accomplish its intent. The estimated price means nothing and can be far from the actual price he sells your car to the salvage company for. The average price so far given as estimates to clunker owners is $75. In my dealership, with about 130 clunkers traded for so far, we are averaging about $450 per clunker. We allow the full salvage value less $50 [specified by the government]. Insist that the dealer take the full salvage price he got for you car [less $50] off the price of the new one.
(6) If you are buying a used car, be sure it’s not a clunker trade-in. It’s illegal to sell a clunker trade-in to anyone except an authorized salvage yard. But, with all the confusion going on and the desperation of many dealers, it’s likely that clunker trade-ins have been and will be sold. I’m seeing an unusually large number of old cars advertised for sale. If you see a used car advertised for under $10,000 be very, very careful. Check first to see if it would qualify as a clunker and, if so, do a CarFax title search and contact the previous owner. You may be able to get this information from the government, but their computers are so overwhelmed, it’s doubtful. Even if the old car you’re considering is not a clunker trade-in, be very wary of paying $6-$10 thousand for an old car that is worth a few hundred dollars for salvage.
(7) New vehicle inventories are approaching their lowest levels ever. You will be pressured by many dealers to buy a car you don’t want because the one you do is not available. They will tell you that, if they have to order the car, the cash for clunker program will have expired. This may be true but do you really want to spend $26,000 or for a new car that you really don’t wan to drive?
(8) 60 months is the minimum lease under the CARS program. This is another big mistake by the government. You should not lease a car for 60 months or more, but you have no choice with CARS. When you sign any lease contract, you are obligated to make a lease payment for every month the lease is for. If the car turns out to have big mechanical problems, you still have to make 60 lease payments. If you die, your estate must make the rest of the lease payments. If you become disabled, you’re still obligated. If you buy or lease another car before the 60 months is up, the unpaid lease payments are added to the price of that new car.
Monday, July 20, 2009
Cash for Clunkers: BUYERS BEWARE
If all goes according to plan, the CARS government stimulus program, “Car Allowance Rebate System”, aka “Cash for Clunkers” will goes into effect this Friday, July 24th. I’m predicting that this government program will be exploited by car dealers and that car buyers will be taken advantage of on a scale rarely seen.
These are the basic requirements to determine if your car qualifies:
Your trade-in vehicle must:
§ have been manufactured less than 25 years before the date you trade it in
§ have a "new" combined city/highway fuel economy of 18 miles per gallon or less
§ be in drivable condition
§ be continuously insured and registered to the same owner for the full year preceding the trade-in
§ The trade-in vehicle must have been manufactured not earlier than 25 years before the date of trade in and, in the case of a category 3 vehicle, must also have been manufactured not later than model year 2001
Note that work trucks (i.e., very large pickup trucks and cargo vans) have different requirements.
Here are some tips to avoid being one of the victims:
(1) Do not pay any attention to car dealers’ advertising on this program. Most of it is entirely misleading and deceptive. Go to the official government Web site, www.CARS.gov and read the real story. Beware of fake Web sites which purport to be the official government Web site.
(2) If you own a car that qualifies for the rebate, be sure that it’s not worth more than the government voucher. Before you consider excepting a check for $3,500 or $4,500 for your old car, be sure that it’s not worth even more. An older, cheaper car that will run is in higher demand today than ever before. In today’s terrible economic times, many people cannot get credit to buy a new car or nicer used car. Therefore they have to buy older, cheaper ones for cash. This high demand and low supply has raised the prices for “clunkers”. Get at least three bids for your old car from the used car managers at the dealerships that sell your make of car. If you live near a CarMax, they also pay top dollar for used cars. Although this is more trouble and time consuming, you may want to consider selling your old car to a friend, neighbor or listing it on Ebay.
(3) Be sure that the dealership you are trading in your clunker to, is registered with the Government. Registered letters were sent out last Friday, July 17, to tell dealers how to register. These dealers will be listed on www.CARS.gov. You can check this Web site to see if your car qualifies for getting bad enough gas mileage www.fueleconomy.gov/feg/sbs.htm.
(4) Verify that the $3,500 or $4,500 credit you are getting for your clunker is coming from the government and not from the dealer. A dealer could find that your car is worth more than the amount he can get from the government program. Or, the dealer may not really be registered for the program. Demand official verification that the government voucher for the VIN number for your car has been issued to this dealer.
(5) Buy the new car before you tell them you have an eligible clunker. You probably have heard the consumer tip, “don’t tell the dealer that you have a trade-in until you have negotiated the best price for the new car”. That tactic is even more important with the CARS program. The dealer sees your clunker as $3,500 or $4,500 in extra profit for him. Don’t let him see that extra profit but make it your extra savings on the best new car price you can negotiate. Remember to get at least three competitive bids on that new car. When you have selected the dealer with the best price, “spring” your clunker worth $3,500 or $4,500 on him and take that right off low price you already have locked in.
(6) Remember that this program does not apply to buying a used car. Although I believe it should, the car you are buying must never have been titled. If the dealer tells you otherwise, he is not using the CARS program and is tying to trick you into thinking you are participating.
(7) Why your clunker could be worth a lot more than $3,500 or $4,500. If sold separately, the parts in a car costing $3,000 can be worth more than $10,000 and more. Cars that are totaled are sold at auction to junk dealers who dismantle the car and sell the useable parts one at a time. Cars that can’t be sold in this country because of emissions or safety considerations can be exported to South or Central America where they have much looser regulations. It’s common in South Florida for cars with very high mileage to be exported because in other countries they have no rules against rolling back odometers or they aren’t enforced. Our government can’t track the VIN of a car sold out of the county. I predict that some dealers participating in the CARS program will be taking cash kick-backs from exporters and junk dealers; or setting up companies in different names to handle these kinds of transactions.
These are the basic requirements to determine if your car qualifies:
Your trade-in vehicle must:
§ have been manufactured less than 25 years before the date you trade it in
§ have a "new" combined city/highway fuel economy of 18 miles per gallon or less
§ be in drivable condition
§ be continuously insured and registered to the same owner for the full year preceding the trade-in
§ The trade-in vehicle must have been manufactured not earlier than 25 years before the date of trade in and, in the case of a category 3 vehicle, must also have been manufactured not later than model year 2001
Note that work trucks (i.e., very large pickup trucks and cargo vans) have different requirements.
Here are some tips to avoid being one of the victims:
(1) Do not pay any attention to car dealers’ advertising on this program. Most of it is entirely misleading and deceptive. Go to the official government Web site, www.CARS.gov and read the real story. Beware of fake Web sites which purport to be the official government Web site.
(2) If you own a car that qualifies for the rebate, be sure that it’s not worth more than the government voucher. Before you consider excepting a check for $3,500 or $4,500 for your old car, be sure that it’s not worth even more. An older, cheaper car that will run is in higher demand today than ever before. In today’s terrible economic times, many people cannot get credit to buy a new car or nicer used car. Therefore they have to buy older, cheaper ones for cash. This high demand and low supply has raised the prices for “clunkers”. Get at least three bids for your old car from the used car managers at the dealerships that sell your make of car. If you live near a CarMax, they also pay top dollar for used cars. Although this is more trouble and time consuming, you may want to consider selling your old car to a friend, neighbor or listing it on Ebay.
(3) Be sure that the dealership you are trading in your clunker to, is registered with the Government. Registered letters were sent out last Friday, July 17, to tell dealers how to register. These dealers will be listed on www.CARS.gov. You can check this Web site to see if your car qualifies for getting bad enough gas mileage www.fueleconomy.gov/feg/sbs.htm.
(4) Verify that the $3,500 or $4,500 credit you are getting for your clunker is coming from the government and not from the dealer. A dealer could find that your car is worth more than the amount he can get from the government program. Or, the dealer may not really be registered for the program. Demand official verification that the government voucher for the VIN number for your car has been issued to this dealer.
(5) Buy the new car before you tell them you have an eligible clunker. You probably have heard the consumer tip, “don’t tell the dealer that you have a trade-in until you have negotiated the best price for the new car”. That tactic is even more important with the CARS program. The dealer sees your clunker as $3,500 or $4,500 in extra profit for him. Don’t let him see that extra profit but make it your extra savings on the best new car price you can negotiate. Remember to get at least three competitive bids on that new car. When you have selected the dealer with the best price, “spring” your clunker worth $3,500 or $4,500 on him and take that right off low price you already have locked in.
(6) Remember that this program does not apply to buying a used car. Although I believe it should, the car you are buying must never have been titled. If the dealer tells you otherwise, he is not using the CARS program and is tying to trick you into thinking you are participating.
(7) Why your clunker could be worth a lot more than $3,500 or $4,500. If sold separately, the parts in a car costing $3,000 can be worth more than $10,000 and more. Cars that are totaled are sold at auction to junk dealers who dismantle the car and sell the useable parts one at a time. Cars that can’t be sold in this country because of emissions or safety considerations can be exported to South or Central America where they have much looser regulations. It’s common in South Florida for cars with very high mileage to be exported because in other countries they have no rules against rolling back odometers or they aren’t enforced. Our government can’t track the VIN of a car sold out of the county. I predict that some dealers participating in the CARS program will be taking cash kick-backs from exporters and junk dealers; or setting up companies in different names to handle these kinds of transactions.
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