Cash for Clunkers is Having Issues

Well, it seemed like a good idea – but turned out to not necessarily be good for everyone. The government had the idea of Cash for Clunkers, where you could turn in your car and get money back for it towards a new car. This meant that those people who needed a new car could get one as there would be more money available to them. This also meant more auto loans and new cars sold and the auto industry could see some profit again.
 
But now they are seeing a different kind of problem. It would appear that some of those people who took out an auto loan through the program could not necessarily pay for the new car that they got. It seems that many of them had their clunkers because they could not afford a new car, and now that they have an auto loan for this new car they can’t afford it either.
 
The auto loan industry is reporting that they are having a problem with a lot of their sub-prime auto loans not being paid. They have more late auto loan payments than before, and many cars are being repossessed. According to CNW Research – those that used the Cash for Clunkers program are having a hard time paying back their auto loans – much more so than those that did not use the program.
 
They said that those that took part in the program to get their auto loan have a significantly higher rate of both late payments and repossessions than those that did not use the program. It looks as though many of these people might not have been able to afford the cars. Although it gave the auto loan and manufacturer industry an initial boost – that boost seems to have worn off.




 

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