New Car Now Or Wait For Cash For Clunkers?

The U.S. Congress is debating the merits of a federal government program where buyers of news cars could be entitled to a hefty discount on their purchase if they trade in an older, gas guzzling or higher polluting model. Dubbed “Cash For Clunkers” the program could stimulate new car sales just as it has in other countries who have rolled out this type of program.

Currently Being Debated By Politicians

Right now, legislators are debating how to frame the American program, one that could save you thousands of dollars on your next car purchase especially if you are willing to wait until the program kicks in. Once it does, you may be able to save between $1500 and $5500 on a new car besides the discounts offered by manufacturers themselves. Clearly, this could be a once in a lifetime opportunity to buy a new car at an unheard of low price.

In exchange for receiving the discount, you’d turn in your older model vehicle which would then be scrapped. The idea behind the program is to stimulate new car sales (and thereby the US economy) while removing from the road cars which pollute and consumer fuel more than the vehicle being purchased.

Some Questions To Ask Yourself

Should you hold off on purchasing a new car right now?

That depends on a number of things. Some questions to ask yourself can help you determine the best course of action to take:

What is the trade in value of your old car? If you have a newer car that you are wanting to trade in, then you’ll lose money on this deal. Though Congress has yet to stipulate which cars will be eligible, it appears that vehicles that are at least eight to ten years old will qualify. But, even an aged Ford Expedition could be more valuable than the money the government will give to you. Thus, the program would be a bad idea for you from a financial standpoint.

Would you miss a better deal by waiting? Assuming that automotive manufacturers will continue to offer the same great deals now while the scrap program is in place could cost you money. Quite frankly, if the government program does eventually kick in, there is no guarantee that car manufacturers will continue to offer deep discounts as they are offering today. Some car companies are discounting their vehicles by $5000 or more right now or offering other incentives.  These discounts hurt the automakers who might be more inclined to having you get the federal discount instead of one that is coming out of their pockets.

What kind of car are you wanting to buy? Even if the car you’re planning to trade in qualifies (older, more polluting vehicle that is registered and has been owed by you for a certain period of time) for the federal program, the new car you’re wanting to purchase may not. Congress is still debating who will be helped by this program, but it appears that buyers of cars worth more than $35,000 may not qualify. Thus, if you’re looking at purchasing a 2010 Lexus RX450h, you’ll be out of luck even if the beater you’re planning to use as a trade-in is a 1993 Toyota Corolla.

Maybe Now Is The Time To Buy

Of course, right now the federal program is being debated so we don’t know what the final parameters of the bill will be, when it will start and when it will end. President Obama has promised to sign the legislation as presented to him, but billions of dollars of taxpayer money still needs to be allocated to cover the program’s cost. Therefore, if you really need or want a new car right now, you may want to negotiate your best deal with or without the federal government standing behind you.

Adv. — If you are planning to purchase a new car, there are some steps you can take to make sure that you get the best deal. Please visit SayLending.com for auto loans information including new car research to help you find the vehicle that is right for you.

Chevrolet Malibu photo courtesy of GM Corp. and is used herein for illustration purposes only.

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