I think that's a phrase we might hear a lot in the next couple of months.
It seems logical that the cash-for-clunkers will create a secondary market for used cars. Let's say my friend Mike wants to buy a new car but his car is worth more than $4500. He can sell his car on the used car market and buy mine for $2000. He can use the money he made from selling his car and the $4500 credit he gets from trading in the 1991 Park Avenue.
I get $2000 for a car that's basically worthless and he gets $2500 ($4500 credit - $2000 to me) towards the new car. We both win.
My understanding is that the credit can only go to someone who the car has been registered to for 3 yrs (or somesuch) the intention is to prevent both the tactic you describe, and also prevent people fixing up junkers that have been sitting in their front yard for years. You wouldn't pay registration on a car you didn't plan to drive, so this should take cars off the road. I think that's the deal at least. If I'm remembering this right, that would mean that to take advantage of this you would have to buy a new car, then resell it!
ReplyDeleteAaron(CR)