Is Cash For Clunkers Frugal?

Like so many things - maybe, maybe not.

I was curious about whether or not my car is a clunker.  I love my car.  I was absolutely certain there was no possible way it could be a clunker.

I drive a paid-for 2001 Volvo station wagon.  I take really good care of it, make sure it gets its service, regularly rotate the tires, wash it and vacuum it so it’s almost always shiny.  I park it in the garage.  It’s an 8 year old car, but it only has 75,000 miles on it.  Good car.

But it’s fun to look stuff up, so I went to cars.gov and entered in the numbers.  Whoa!  Shockeroo!  It turns out my car does qualify for the Clunker program!  I could get $4500 for it if I bought a Chevy Aveo.

Cue the drama: I stand here with fist raised.  My car is not a Clunker!

And it turns out that Clunker cars get smooshed.  What a waste of a perfectly good car.

I’ve been hearing a lot about how retailers are worried because the American consumer has seemed to permanently embrace frugality.  Well, I think Cash for Clunkers goes to show that businesses don’t have to worry.  I think it shows that this frugal thing is just a temporary fad for a lot of people.

It doesn’t really make sense to me to trade in a good paid-for automobile to take on more debt for a new car.  Even if your old car doesn’t get 22 mpg, well, the fact that it may be paid-for is a bigger savings.  And here’s the other thing - if finances get tight, the Repo Man isn’t going to come and take away your paid-for “clunker”.  A paid-for car is worth more than its stated mileage, and maybe even more than the Blue Book price.  It’s worth peace of mind, it’s worth cheaper insurance, its worth being able to get to work, the grocery store, and the doctor without owing anybody for the privilege. This is a little thing I like to call - FREEDOM!

So, no, I don’t really think Cash for Clunkers is frugal.

But, wait a minute.  It can be, under certain circumstances.  For instance, if you are driving a 1988 Hyundai Excel (since 1988) so (naturally) you have been saving up for a new car (like a Chevy Aveo) and you finally have the money to buy it.  Then it would be a good idea to take advantage of this program, because you were planning on buying a new car anyway even before Cash for Clunkers came along.

It could be that everybody who is taking advantage of Cash for Clunkers is in this exact situation.  But I don’t think so.

P.S.  A new 2010 Camaro doesn’t qualify.  Rats!