Junk Cars Are Gold Mines
The popularity of the clunkers for cash program has many car buyers scrambling to dump their junkers.
It sounds easy - trade in that old gas guzzler for a shiny new fuel efficient machine.
That ease may have led to its overwhelming success.
The government program, Car Allowance Rebate System (CARS), was given $1 billion of stimulus funds to help consumers buy or lease more environmentally-friendly vehicles.
According to California Congressman Howard P. "Buck" McKeon, in one week more than 200,000 vehicles were purchased resulting in nearly $5.5 billion of new economic activity. This is good news for both the environment and the economy.
"The CARS program is an example of how the entire stimulus bill should have been crafted; it's amazing to see what good can come from putting tax dollars back in the hands of the taxpayer," said McKeon.
Although the program, also known as "Cash for Clunkers," has been wildly successful, there are some drawbacks.
One of them is the length of time the funds are available to dealerships.
According to CARS.gov, the program runs through November 1, or until funds run out. As of early this morning the program was suspended because of lack of funds, but in a late morning House of Representatives session, a vote to provide an additional $2 billion in funding was passed.
The Senate has stated that it will take up the issue next week, which leaves car dealerships in a dilemma.
The process requires that when a clunker is traded in to the dealership it must be disabled. When the car is picked up by a salvage company they provide the dealership with a certificate for the amount of the vehicle, but in the mean time the buyer has already left with a new car.
If sales are made this weekend while the Senate vote is still up in the air, dealerships run the risk of not being reimbursed by the government.
"We're out the $4,500 or $3,500 until the government pays us, and frankly that makes us a little queasy," said Don Fleming owner of Valencia Acura. "We don't know how efficient they're going to be or how fast they're going to turn around the money."
The White House Press Secretary told reporters Friday that the program would continue seamlessly, but that still has many dealerships worried.
"Not only do we have money out there, but to get the money we have to show proof that the car has been destroyed," said Fleming. "So if it stops in the middle, the guy that gave us the car is out, and I'm out. The end result is that the dealer is stuck with the liability."
Cars must meet basic standards to qualify for the CARS funding.
To find out if your car qualifies click here.