As a former car salesman and with 10 years in the car business; I can understand why the car dealers are like sharks in an ocean full of dead fish right now—they’ve been starving for the past two or three years and are ready to qualify anybody who can sign their name—sort of like the housing boom of 2003, remember that don’t you? Well, in a couple of years down the road, tons of these car-loans are going to go bad and these just may be the very same car loans that stop that person from buying his first house.

The funny thing is that what everyone who is running towards the car dealers to get their cash for their clunkers don’t realize is that they would have gotten the same deal, in some cases more, for their trade-in “clunker” in a normal trading situation anyway. Oh yes, and I guarantee it.

You go in to trade in your clunker, a 1995 Dodge worth maybe a grand, $1500 tops. The used car dealer says he’ll give you a grand for it and you demand your $3500 or $4500. Okay, he says I’ll give you $3500, and you push for $4500; so he gives you $4500. The trade-in’s ACV, actual value, is $1500, so the dealer loses 3 grand right? Wrong; the markup in the 2010 Chevy Impala you’re buying is 4 grand, so they actually make a grand, 2 grand if they give you $3500, plus if the car is less than 90 days on the dealer’s floor-plan they make another dealer incentive called dealer holdback, a set percentage of the sticker price, plus any other incentives the manufacture’s are giving them.

I’m always amazed, no matter how many times these kind of things are repeated, over the years, how quickly and how many people fall for this kind of “publicity.” It’s almost like people are afraid they’ll “miss out” on something their neighbor got, when he drives home a new car and parks it in his driveway.

Hey, ask him how much he’s gonna like his new car the first of the month for the next five or six, some are doing seven years, when his monthly payment comes due? Just sayin’ …