Cash for Clunkers Might Not Be Such a Good Deal
It's official - the Cash for Clunkers program is a hit. But while that might be good news for the ailing auto industry, it's not necessarily good news for consumers.
In case you're not familiar with the program, here's how it works. When you turn in a low-mileage vehicle for one that meets higher-mileage guidelines set by the government, you get up to $4,500 off your purchase. Sounds like a lot of money, right? But not when consider that Cash for Clunkers presents the same problem as the blowout sale at your local discount store.
Let's say you buy a pair of shoes normally priced at $50 for 50% off. You might think you're saving $25 - but that's only true if you planned to buy that pair of shoes no matter what. If you only purchased them because of the sale, you're actually out $25. It's the same thing with cars. If you were dead-set on buying a new hybrid anyway, then yes, you're getting a great deal. But if you're using the incentive as an excuse to get a shiny new toy that you really can't afford, then you're not getting a bargain - in a way, you're getting ripped off.
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