I bought a car this weekend using the cash for clunkers program.  I got $4,500 off a new car. That's not bad.  It will take an awful lot of cash in a 2.5% APY savings account to equal that amount. There was a lot of aggravation though.

So let me start by saying that I had a car from 1988 that was nearing the end of its life.  I had to decide to put in several thousand  to make the car drivable or go ahead and look for some new wheels.  I don't like spending money on cars.  They are the worst investment.  The minute you drive the car off the lot, it loses something like 20-30% of its value.  To me cars are functional objects.

I also don't drive more than 1-2,000 miles per year, so I don't want or need anything fancy.

I decided last Friday to take a trip down the dealer to see what they had and whether my car would quality.  I didn't realize that Cash for Clunkers was set to expire the following Monday.  The last time I had checked, the program was supposed to run until November.

When I reached the dealer,  I realized that something was up.  The dealership was a madhouse.  There was a waiting list to talk to a salesman. I was interested in a Prius. I like the look , have read a lot about it, and liked the 51 MPG fuel efficiency.  I could fill up my tank once per year.

I waited and in the meantime struck up a conversation with one of the sales managers. He said that the dealers hated the Cash for Clunkers for several reasons.  One, it was chaos.  The government hadn't provided adequate direction and was changing its directives every week.  The latest was changing the deadline from November to August 24.  He didn't know what was going to happen to hundreds of customers who had ordered cars that were coming in the next week.  They expected to get their Clunkers rebates but probably wouldn't because the program will be over.

He also said the car companies had begged the government to wait until January 1, 2010 so that they could stock up their inventory.  The car companies were out of a lot of cars and weren't prepared for the demand.

Still, I looked at the full showroom, and the card flying off the lot and thought that maybe this was a bit of sour grapes.  After all, the car companies were all going bankrupt just a couple of months ago.

My Ride in a Prius

After about an hour of waiting I finally got to ride a Prius.  I had high expectations.  It was the 2010 which was supposed to be roomier and zippier than its predecessor. I was disappointed.  First, I was claustrophobic in the car.  The low, sloping roof in the back, and the deep dash in the front made me feel disconnected from the driving experience.  I felt like I was in a tomb, not a car.  The interior also looks super cheap.  It's all flimsy plastic.  Toyota clearly spent their money on the exterior and the engine. A $10,000 car would have a better interior finish.

Lastly, I stepped on the gas-pedal and waited, and waited, and waited.  The car hardly moved.  It felt I was driving a tank with a go-cart engine. I realize  some people don't care about pick-up or acceleration, but the thought of driving 100,000 miles in the car made me naseous.

A Prius was not for me.

Cash for Clunkers

I finally found a car I wanted and the dealer and I came to an agreement. I don't like debt so decided to pay for the car in cash. The car was listed at $19,100 and with the $4,500 Clunkers rebate I got the car for $13,100. Not bad.  The dealer tried to get me to sign a document in which I guaranteed that I would pay the $4,500 if the government didn't come through on their end.  This is a no-no and is prohibited in the Clunkers agreement so I politely declined and pointed out the error of the dealer's ways. Nice try.

I then handed over my title, showed my registration and provided the last two years of my insurance policy.  I then had to go home and drive the Clunker to the dealership so that they could verify the Vin number (sort of like the social security number for the car). I guess they also had to verify that the car was drivable.

That done, I went home to mull my day. On Thursday I'm scheduled to pick up the car. 

Observations

1. Many of the car salesman moaned and groaned about the program but they were all happy to sell the cars. They also made a lot of comments about how the government couldn't run a car program so how are they going to run health care. It's true the process was chaotic, but Clunkers still did something that the car companies themselves could not do - stimulate demand for their cars. Warts and all, the program seems to have worked.

Many will say that it only shifted demand.  Maybe so, but I probably would have held on to my gas-guzzling clunker for  another couple of years if the program hadn't come along.  The guy down the street who just traded in his car was in the same boat.

2. Hybrids are still only a fringe vehicle.  Based on my drive of the Prius I still don't think it's ready for the mass-market.  Gas prices would have to go up to $10 per gallon before I would consider this tricked-out go-cart.

Now we'll just have to see if I actually get my car on Thursday.