New Legislation You Need to Know About

clunker

You’ve heard of the “Cash for Clunkers” government program that recently ran out of the original $1 billion. The Senate just approved an additional $2 billion for the program last night to extend the popular program and President Obama is expected to sign it into law as early as today. But just because it’s popular doesn’t mean you should take advantage of it.

Here are the details of the program. You can trade-in a gas-guzzling “clunker” that is less than 25 years old and gets 18 MPG (miles per gallon) or less. Check fueleconomy.gov for official MPG numbers. You must buy a new car in conjunction with the trade-in. The car must have be registered and insured for a full year before the trade-in. The program runs through November 1, 2009 or until these additional funds run out. Check out the cars.gov for full details.

If you were looking to buy a new car already (before you even knew about the $4,500 rebate), you can get a pretty good deal for a trade-in if your car qualifies. I would check out Kelly Blue Book or Edmunds to figure out a rough private party value for your car. If it’s worth way less than the $4,500 rebate and you have the money to pay for another car, I would take advantage of it. If you don’t have the money or have to take out a loan, why get into debt, especially if your clunker works just fine? It just seems like a waste to me, especially when the working clunkers have to be scrapped.

Another piece of legislation that you might not have heard about is the extension of the $250,000 FDIC insurance through 2013 that was passed back in May. The limits are expected to go back to the original $100,000 per depositor on January 1, 2014. In the meantime, you’re protected up to $250,000 on bank accounts, CDs, IRAs, and other accounts. You don’t have to worry about losing your money if a bank fails.

Photo credit: REUTERS/Jonathan Ernst

What do you think of the Cash for Clunkers program?

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3 thoughts on “New Legislation You Need to Know About”

  1. I personally think that allowing the country to put such a big burden on future generations all in the name of “stimulating” the economy and giving the consumer new debt is ridiculous. I think it is selfish and inconsiderate for us to blindly accept a program simply because we will get $4500 out of it. Our kids will be paying that money back and the person acquiring new debt loses too. It’s almost the same as me going out and running up a credit card in my sons name knowing he was going to have to pay it back one day.

    I am always surprised at how so many people “JUMP” at the chance to go into debt. Instead of calling it a rebate, the Government should just call it bondage. How many people would be attracted to the deal if they called it what it is?

    I wrote an article calling the cash for clunkers program what it is, and that is debt for suckers. I think it is selfish to take advantage of this program, but that’s just me.

  2. Brad, good insight. I agree with you that people should not go into debt to take advantage of this deal. However, if they were already going to buy a new vehicle anyways, and pay cash for it, why not take advantage of some additional savings? It’s really a question of who’s going to pay for it. We as taxpayers are obviously going to pay for it in the end. And that’s the part I don’t like.

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