The Cash for Clunkers gives you up to $4500.00 towards the purchase of a new car. There are some basic requirements to receive the discount. The car needs to be less than twenty-five years old and have less than an eighteen miles per gallon rating in order to qualify. If you are in the market for a car, and you have money to pay cash for the car this may be an option to look into.
However if you are interested in taking out a loan to pay for the car compare the car that you are thinking about buying to the cost of similar used car that is just a few years old. You need to calculate the cost in interest on the car loan and the depreciation rate of the new car before you decide to purchase a brand new car. The $4500.00 can help to decrease the hit that you take in depreciation costs and in the interest rate, but that depends on the type of car that you buy.
It is best to pay for a car with cash, but if you are in a situation where you have to finance your car, then you should finance your car with a three year long. If you cannot afford the payments for your new car if you were to pay it off in three years, then you cannot afford the car. This will prevent you from spending too much on a car, and allow you to focus on getting out of debt and building wealth.
If you choose to take advantage of this program you should be careful and pay attention to the terms of your loan. This is extra money in addition to all of the other incentives that may be offered. Try to negotiate a lower price and a better rate before you sign the papers.
This may be a good deal because it will help you get a good car with better gas mileage, if you were already planning on purchasing a car. However, you should not use it as an excuse to buy a car when you already have a good one that meets your needs. Plus you should not let it push you into taking on additional debt. It is important to stick to your plan and goals. Additionally you should avoid rolling your old loan into your new one. This program requires you to give the car to the dealer, so it may be difficult to do this. However rolling over an old loan means that you will drive off the lot owing more than you car is worth. It can make it difficult to break the car loan cycle.
