Clunkers raising used car prices?

August 11, 2009 4:05:44 PM PDT
If you're looking to buy a used car, be prepared to pay a little more. The popular Cash For Clunkers program could be driving up prices. By some estimates, the clunker program could cause prices to rise 5 to 10 percent higher, especially for vehicles under $4,500.

At the Yonkers Auto Mall, the promise of an affordable used car draws customers in. The problem is there are no cars in the $3,000 to $4,000 range right now.

Blame it on Cash For Clunkers. People who would normally trade in an old car worth $500 or $1,000 can now get up to $4,500 from Uncle Sam. The government-backed rebate has been wildly successful boosting new car sales. But used car lots suddenly have lots of problems.

Under the program, the clunkers have to be destroyed. So fewer cars being turned over means fewer options for consumers, and that means higher used car prices. That makes it more difficult lower income families looking for an affordable car.

And dealers are also hurting. Zion Ruvin says business at his Bronx-based dealership is down 80 percent since Cash For Clunkers began.

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WEB PRODUCED BY: Bill King

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