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Cash For Clunkers Update: Gov Promises Refunds By End Of Sept

Posted in auto industry, Beater Cars, Car Buying, Car Deals, Cars, Cash for Clunkers, New Cars, Newsworthy by Suzanne Denbow | September 15th, 2009 | 11 Responses |

Life After Clunkers

When Cash For Clunkers officially expired for consumers at 8:00PM on August 25, 2009, roughly $2.8 of the total $3 billion allotted for the programs use had been spent – on paper, at least. In reality, dealers had yet to see a dime of their promised rebates, and many had actually ended their participation early when triple digit rebate tallies threatened to put them in the red. For every dealer that praised CARS for the business it drove in, there were two more who were on the brink of losing their shirts if they didn’t see some cash flowing back soon.

Today, three weeks after the carnage, Transportation Secretary Ray LaHood says $2.5 billion has been approved for release, which accounts for about 85% of the 690,000 rebate applications submitted. By the end of September, LaHood promises every dealer will be reimbursed, followed shortly by hell freezing over.

Source: Detroit News
Image Cred: AP Photo

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11 Responses

  1. Your article doesn’t touch on the number of cash for clunkers deals that were rejected by the government after the sale was made and the car destroyed! How does the dealer deal with this issue? Of course, most of the negatives of cash for clunkers would have been avoided had the government not demanded that the cars be destroyed! It certainly would have softened the impact of cash for clunkers on auto repair shops, auto parts stores, used car prices, car donation charities and lower income citizens.

  2. Dave says:

    The onus is on the dealer to properly vet the proposed deal and make sure the paperwork is in proper order. If they submit a deal that is rejected (for a reason that cannot be remedied, like lack of insurance, incorrect mpg rating, etc.) then they are on the hook for the voucher amount, unless they included language in the sales contract that the buyer was liable (which CARS legislation prohibited).

    I agree that the “clunkers” could have probably been better dealt with, however.

  3. Ben says:

    I would like to know the stats on deals rejected. How many consumers drove their cars home and then later had to return them, or were forced to pay the voucher amount.? How many consumers waited weeks without a vehicle to drive only to be told they were denied? How many trade-ins were destroyed leaving the consumer with NO vehicle and NO recourse. These are the questions we should be asking LaHood and anyone else willing to provide an honest answer.

  4. Suzanne Denbow says:

    Ben: As Dave mentioned above, the CARS program protected consumers much more thoroughly than it did dealers. As per the law, dealers MUST allow the consumer to purchase the vehicle regardless of whether the application was approved or denied. Dealers were also explicitly prohibited from repossessing the vehicle if the application was later denied. The dealers were/are the ones eating the cost of the $3,500 – $4,500 rebate.

    The “honest answers” you’re looking for are readily available on the CARS.gov website.

  5. Geoff says:

    I’m just happy to see someone use the word “onus” around here.

  6. Ben says:

    CARS.gov states no where that I could find about the many people who signed waivers believing it was mandatory and part of the program itself. Most were signed prior to warnings posted. Ive seen two news videos showing cars being returned to dealer lots after denials and read posts of cars being reposessed. There is no definative answers to the question of waivers that have already been signed and what recourse the consumer has once their vehicle has been disabled other than accepting the tiny (usually $50) salvage fee they were given. And although repo is prohibited, it is apparently happening. Others have posted having to renegotiate a price in order to keep their vehicle.

  7. Suzanne Denbow says:

    Ben: http://www.cars.gov/faq#category-04

    Scroll down to the Contingency Questions and, as I said before, you will find the answers you’re looking for. As far as consumers being “hoodwinked” into signing waivers, the old adage “Buyer Beware” is true. If they could not be bothered to do 10-15 minutes worth of reading to ensure they were absolutely clear on the terms of the CARS agreement, whatever ramifications resulted from their gross ignorance are entirely their responsibility.

    I personally have yet to hear a single story such as the ones you have presented and I strongly suspect whatever you’re hearing or reading has been sensationalized and conveniently edited of a few pertinent facts.

  8. Dave says:

    Well put, Suzanne. I participated in CARS, and while it was far from smooth and I wondered if we were actually going to get our new car, I never once felt like I was going to get “hoodwinked” because I BOTHERED TO READ THE WEBSITE AND MY PURCHASE CONTRACT. In no way would I excuse shady dealers who take advantage of uninformed buyers, but the easiest defense against such practices is simply to pay attention.

  9. Ben says:

    If I said something offensive that spurred the comment I received, I apologize. It was not my intention in any way. If you feel its gross ignorance (pretty harsh I think) then maybe you are correct. As far as doing research, most thought they had but things kept changing . Many of us trusted the dealers and that was indeed our mistake. The cars being being forced back by dealers are numerous on the edmonds & related blogs. Two that I know of were on news channels. The first link is to one of the news broadcast. The other 2 are from the blogs. I would have searched for the other video and repo reports but it would probably take me more than the 10-15 minutes (which is apparently my limit) . And you may very well be right about what I am reading. Another lesson learned. I trust that people are honest in what they say and the information that is available is accurate. Until I saw the news story, I personally had never been to a forum so never questioned the authenticity of any of it.


    Indy says:
    September 5, 2009 at 7:16 pm

    Alyce says:
    August 28, 2009 at 6:55 pm

  10. Suzanne Denbow says:

    Ben: My ire was not directed towards you, it was directed towards the growing number of lazy consumers who refuse to take responsibility for their actions. I agree with Dave’s last comment: dishonest practices by dealers should not be tolerated, but neither should the babysitter mentality. You want to buy a car, you read the fine print.

    As far as dealers taking repossession of the cars, if you read through the link I posted you’ll see that they ARE authorized to do so IF any of the information the customer provided on the initial application was later proven to be false. Dealers are not the only ones guilty of trying to perpetuate scams, there are plenty of consumers in on it too.

  11. Let’s not forget the fact that this program was set in place as an effort to stimulate automotive markets in the second half of the fiscal year. While this quarter is starting to bode well, I’m guessing that there is a strong correlation between the targeted date that stimulus actually comes into effect and the period by which payments must be issued.