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The Car Allowance Rebate System certainly helped carmakers sell more cars this summer than they would have in this troubled economy. But six months later, there’s evidence that some “Cash for Clunkers” buyers have a higher repossession and late payment rate than the average consumer.
According to CNW Research, the repo rate among high-risk CARS buyers is more than twice that of the same category of consumers that didn’t utilize the program. Of subprime buyers who used the government-funded program, nearly 5 percent have had their newly purchased vehicles repossessed. The same group of buyers who didn’t use the program has just over a 2-percent rate of repossession.
“Faced with a new monthly payment of $250 to $350 per month, many of the users admit they didn’t think past the new car smell,” CNW said in a release. “Most, however, anticipated the economy improving substantially between last July and today and felt that improvement would give them the financial boost necessary to at least offset some of the additional monthly payment.”
Turns out, the high-risk buyers involved in purchasing more than 600,000 vehicles under the program also have a higher rate of buyer’s remorse than non C4C buyers. Nearly 20 percent of the buyers surveyed that used the program regret the purchase they made, while buyer’s remorse among non-incentive users remains low at only 5 percent.
Source: USA Today
Indeed, Mike. Not to mention the Feds would’ve been better off physically giving $20k to whoever wanted a new car (between the bureaucracy and the actual tax credit) than going through with this travesty of capitalism. Cash for Clunkers was a JOKE at best. Most people who took advantage of this either could not afford a new car payment or were taking advantage of the tax credit to buy a new F150. Outrageous. Reason 1001 why i’ll never buy domestic again; although the most bought vehicle under this program was the Toyota Corolla (made until recently, in California). What a load of crap. P.S. One of the 548 ’87 Buick GNXs ever produced were traded in under this program. I really hope whoever traded this vehicle in, knowing its prominence in automotive history, is enjoying their Corolla.
I’ve been preaching this for months!! Cash 4 Clunkers goes against simple supply and demand logic. We’re pushing new cars into a market already saturated with countless used and repossessed cars (i.e. http://www.repofinder.com). Now new cars depreciate faster, more Americans are in debt, and more repossessions are on the horizon.