honestautoestimates.com » economy

Effect of Cash for Clunkers on Auto repair shops

scott — Thu, 20 Aug 2009 16:07:00 +0000

The Cash for Clunkers program seemed to help the failing auto sales industry, but at what cost? Auto repair shops rely on older cars to survive. The honest repair shops make an honest living providing repair and services to consumers that allows them to keep their cars well after the payments stop. This is in line with what most economist would like to see American’s do, get out of debt! By repairing and servicing a car it can last for a long time and the overall cost of ownership is significantly cheaper than having car payments. The “Cash for Clunkers” program takes these cars off the road and replaces them with newer vehicles under warranty for repairs. This mean that the finance companies gain revenue, the dealership gains revenue, but the repair shops lose revenue. The normal rate for vehicle turn over is out the window now, causing a sudden impact on the repair shop industry. Under normal conditions people often by cars if their is no longer economically viable to repair and this turn over process take place over a period of time. What the Government has done is cause an instant change in the landscape that is affecting repair shops and eventually consumers. If repair shops no longer have cars to work on all at once they will go out of business, then when these “cash for Clunker” cars come out of warranty there will be far less repair shops around to provide service and repair. Adding the fact that these cars will all come out of warranty at about the same time, this will mean there will be a greater need than supply for auto repairs and service. The rule of supply and demand will kick in and people will be forced to pay a lot more to have these “Cash for Clunker” boomers worked on. Now, since the auto repair industry employs 3 times as many people as the manufacturing industry, the impact on the economy will be more dramatic than the sales industry. Maybe there would have been a more equitable solution that would not have an adverse affect on the repair industry. Perhaps a “Cash for Clunkers repair” program allowing people to have their vehicles repaired to bring up the fuel mileage.

$4500 Cash for Clunkers, will not work!

scott — Wed, 01 Jul 2009 23:17:52 +0000

Yeah the problem is that the cash for clunckers bill is not worth the paper it is written on. You see people who are driving cars that will qualify for this program do not have good credit or at least the credit it takes to buy a new car now a days. Most banks now require down payments from beacons of even 760. Those with scores below 670 are not even going to qualify, even with down payment from a “Cluncker Buy out plan”. This means that very few are really affected by this. The deal is for purcahse of a new car not used. The used car buyer will only get about $1500 at best, now that may help a little, but in reality we are just feeding the helpless to the lions. By that I mean the people foolded into trading their car to get the bail out money, have good enough credit to buy and can qualify for the $4500, are more than likely driving cars that are worth more than that anyway so it will not make any difference. The people that are buying used cars and can only qualify for $1500 assitance, do not have credit for new cars and that means they are relying on secondary finanacing (which was not as affected by the credit crunch because most is “In House”) that is at wildly high rates. These rates can go as high as 22%, so when I say leading to the lions, I mean causing people that might pay $500 to fix their current car they have no payments on, to trade that in for interest rates that are out of this world. The eventual outcome from all of this will be that these “Low credit score” people will not be able to keep the car because the payment is too high, they are also the group most likely to be laid off so they will have the car repossed and ruin their credit even more. Mean while the people with good credit are not going to buy because they can afford to fix what they have and will not feel any benefit from a $4500 assistance program because their car is worth more than that. End product, the governement annouces a plan that benefits very few and causes more hardship on those that need no more, but it all looks good on paper! If the government wants to help people and the car industry, work out credit issues so people can finance cars agian with little or no money upfront. Then get consession from the auto makers to lower the price to put them within range of todays budgets. Finally, take the bail out money going to the BIG BUSINESS and spread it around the country in SMALL BUSINESS, which always seems to save the country in times of hardship.

Americans for Americans

scott — Mon, 18 May 2009 03:00:30 +0000

At a time when companies are sending more and more of their telephone jobs overseas, HAE has not. We believe in Americans helping Americans, Americans jobs staying in America. IF companies continue to move jobs outside of the U.S. we will slowly move on economy out of the country. By paying workers in other countries with our wages, we effectively take money from our economy and infuse it into other countries. The U.S. should not be isolated from the rest of the world, but as Americans we should at the very least take our citizens into consideration when making decisions not just profits.