Investing Blog

Congress is up to no good again. This time however, a million or so people are going to make out like bandits, and so are the car companies. A new cash for clunker program from Congress will give people up to $4500 to trade in an existing car for a higher MPG new car. That’s a deal, especially if you’re driving just plain garbage.

More to come as legislation is updated

I couldn’t be more disappointed with the result of the final House language of the bill. I drive a 15 year old junker, a worthless car in the most literal sense. See, it’s worth about $900 in prestine condition, except that I have at least $5,000 in damage on the car. Oh well, it gets me the same places as a BMW minus the air conditioning and sans the comfort. Unfortunately the car gets a combined 19 mpg in city and highway, otherwise the government would be paying me $4500 to hand this car over to them, despite the fact its presently worth a negative $4100.

So here’s the deal. If you own a car, truck, or SUV that gets less than a combined 18mpg you’re in luck. You’ve got even better luck if the car is downright garbage, because that’s where the real money is.

So basically you’ll be able to trade in any <18mpg car, truck or SUV, for a automobile that gets more than 22 mpg and you’ll get $3500 for your ride. No matter how worthless, how torn up, or however many miles. All crappy cars are now worth a bare minimum of $3500 due in part to this legislation!

If you can somehow improve your combined MPG by 10 MPG, you’ll get an even sweeter deal! How about $4500 for your car, no matter the condition or how old it is! That’s a STEAL.

Here’s a breakdown:

Your car must be less than 25 years old

You must have owned the car since March 2009 (This may change in the final language)

It must get less than 18MPG in COMBINED highway and city driving. (Mine gets 16mpg in the city, but 26 on the highway, thus a combined 19mpg. DARN!)

You must buy a car that gets more than 22 mpg to qualify for $3500. To get $4500 you must improve your MPG by 10 over your old car.

You will not get any more than $3500 or $4500, so don’t bother trading in anything nice. Remember, the Treasury only wants to buy cars that should sell for $500. They don’t want to buy your $40,000 car for $3500, that would make them money, and the government hates making money.

The voucher of $3500, or $4500, will be sent directly to the dealership. Basically if you trade in your old car you get one of the two vouchers to buy a NEW car. This is a great deal on some of the lower end GMC cars, you could practically get a new car for $5500 with some models.

From an investing standpoint you want to get in on this. Germany has run a very similar program which sent new car sales up by 38%. As of right now, I’m looking into some call options on Ford stock. There is certainly a lot of cash that will be flowing directly into automaker coffers.

Investing