I happen to have a 1997 Jeep that my 18 year old step-son drives that we originally bought used in 2001 for my wife. Passed it on to him 2 years ago. Runs great, over 150,000 miles. If I were to try to sell it, maybe I'd get $1,500. I gave a fleeting thought to trading it in to gain an extra $3,000 but then I did some deep pondering.
1) It's a sellers market right now. Do you honestly think the dealerships are giving any decent discounts off the price of cars right now when they have a showroom full of potential buyers? There goes the "extra" $3,000 I get for the trade-in
2) If my step-son were to buy a simple, modest vehicle say with a $15,000 sticker price on it and finance roughly $10,000 for 4 years, he'd pay appox $1800 in interest. There goes over half of the "extra" $3,000 I get for the trade-in on top of the lack of price haggling.
3) Right now, he's only carrying liability insurance on his "clunker". No reason to pay for collision insurance with a deductible on the Jeep. How much extra for insurance on a new car? A heck of a lot more than he's paying right now.
4) He gets saddled with a car payment (he doesn't have one now, we gave him the Jeep free and clear). He gets saddled with probably a tripling of his car insurance.
Back when gas hit $4.00 a gallon he got on a kick about wanting to trade the Jeep in for a more gas efficient vehicle. Makes sense, the Jeep only gets about 17mph. I gave him an assignment. If gas is $4.00 a gallon and he uses 500 gallons of gas a year, tell me how much you'll save per year if you buy a car that gets double your current gas mileage. He did the math and came back to me and showed me what I already knew... it would take 6 years to break even if he bought the used car for $6,000 that he'd found. He never brought it back up again, and of course gasoline drifted back down to where his break even point would have been another couple of years.
Sorry for the rambling, but the bottom line is Do The Math and think things through. I didn't even touch on the fact that of course the gov't (taxpayers) are paying for this.
And the fact that these people buying new cars aren't able to go out to dinner, go to movies, spend in other ways for the next 4 or 5 years as they deal with new car payments and increased auto insurance.
I'll also be curious to see how many reposessions there will be in 6-12 months.
Morning Post 10/03/2025 SPX
9 hours ago
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2 comments:
You have to love unintended consequences. I just read an article that the charities are being hurt because lots of people who would have donated their cars, traded them in instead. Add the reduced cash flow to the probable higher repossession rate and this may not look like such a great deal.
I have also seen that the dealers' stocks of fuel efficient cars are dropping fast, which will also drive the prices up.
And another unintended consequence are the auto parts stores and fix-it shops that have lost a lot of business as the clunkers are destroyed and won't need fixing. Help one group, hurt 3 others. And as I mentioned in my post, now these people that have bought new vehicles won't have money to spend on every day extras like dining out, movies, going to the mall, etc.
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