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Originally Posted by gmb92
Your math is wrong. Also, 10,000 is a fair amount less than EPA "average miles driven", but $4 / gallon is above current gas prices (for now!). Assuming we're starting with a scrapped vehicle that averages 15 mpg and purchasing a vehicle that averages 25 mpg...
Old car: 10,000 / 15 mpg = 667 gallons X $4 / gallon = $2668
New car: 10,000 / 25 mpg = 400 gallons X $4 / gallon = $1600
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Yes, the EPA average miles driven is 12,000. Of course, if you look at their website where they explain the calculation, they make it clear that the average number applies primarily to vehicles less than 10 years old and the average for "all vehicles across the fleet" is....10,400 miles. We can probably extrapolate from there that older vehicles are actually driven less than 10,000 miles per year on average, dragging down the overall average.
Now we see another counter-argument to alleged gas savings benefit of the cash-for-clunkers program. New vehicles are driven *more* than older vehicles, meaning that those who turn in their old vehicles for new vehicles may average at least 20% more miles per year in their new vehicle, and likely significantly more.
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So more than $1000 gas savings per year per consumer.
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My calculations may be off on the original amount, but apparently the savings are likely to be closer to my calculations than yours once the added miles are taken into account.
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Also, lowering oil consumption is a benefit for everyone, both economically and environmentally. It's speculative, but perhaps this provides good educational value for our over-consumption of energy society, which collectively is a drag on the economy. Folks are being rewarded for consuming less energy.
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There's that social engineering morality creeping in again. I use to think that Republicans were evil and wanted to push theocracy on us. I still see much of that, but I've found that the state-loving liberals are no better. The sins of mankind must be purged by government force.
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Lastly, older cars tend to become a bit less fuel efficient over time compared with their EPA rating (a few mpg from experience), so the 9.6 is probably a bit of an underestimate in actual fuel savings.
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And newer cars don't? Manufacturers perform every trick in the book to pump up EPA estimates on new cars. I think this one is a wash in the end.
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On a 5-year 7% loan of $8,000, total interest appears to be about $1,500 or $300 per year.
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The average interest rate for auto loans is a little above 7%, but how many C4C buyers qualify on the low end and are buying on 5 year when 7 or 10 year loans are more "convenient"? Which cars that qualiy for C4C are under $12,500 + tax + licensing+ registration+drive off fees+etc? Is it good, in your social engineering mind, to push people to make large purchases that they otherwise wouldn't, and to become beholden to the bank with a monthly payment for a minimum of 5 years?
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Insurance is more than for an old car, but remember - the consumer now has a nice asset that's worth something.
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The customer doesn't have it. The bank owns it for 5 to 10 years. On a 5 year loan, the vehicle isn't even half paid off for at least 32 months, by which time the owner has paid the bulk of fees that come with owning a late model car. When paymetns are late, there are bank fees, which can be substantial (and which they love to charge), and in the end, the owner would be far better off putting the money in the bank rather than being encouraged to consume.
08-04-2009, 07:59 PM
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