Some dubious deals in an otherwise blockbuster program

The program was so well accepted that the administration had to grant an additional funding of $2 billion in addition to the original allocation of $1 million to Cars Allowance Rebate System (CARS), the official name of the program.

The Nov1 deadline for the closure of the program hardly came in the picture as customers snapped up new cars within days.

All in all, the clunkers program has given a reason to smile to everybody. Still, some customers could not fit into that compartment of happiness and satisfaction.

The dubious deals
These customers, through the consumer advocacy groups have now urged the Department of Transportation (DOT) to crack the whip on dealers who offered dubious sales terms to consumers.

The groups have alleged that few dealerships forced customers to sign agreements and consent to repaying their Clunkers rebate back in the event of the dealership not getting the reimbursement from the government.

The DOT agrees that car buyers are under no obligation to sign the so-called contingency forms in case they want to swap their old cars for new ones.

Rosemary Shahan, president of Consumers for Auto Reliability and Safety said, “It involves dealers attempting to shift the risk from themselves to consumers if the Cash for Clunker deals don't go through. We believe it is a form of bait and switch.”

The other side
The dealer’s side of the story is that they have to wait, at times for days or even weeks, for their reimbursements to be processed by the government.

At times, the wait time is so long that the worries of remaining unpaid creep in. Hence, to be on the safe side, they sign a pact with the consumers wherein the latter returns the rebate if it remains unpaid to the dealer.

“While problems with application submissions for the clunkers program have been significantly reduced, getting approval for dealer reimbursement requests is still facing significant hurdles, John Lyboldt, a National Association of Automobile Dealers vice president.

The complaint box has some more letters as well. Some salvage yard owners argue that the program would have been even better had it allowed the engine of the clunker to be resold.

As per the conditions incorporated under the clunkers program, the entire vehicle is crushed and is rendered as scrap.

Jimmy Ruocco, owner of Freeport Auto Parts & Wrecking rued, “By disabling the engine as a part of the requirement, the program is limiting another avenue of business.”

"Our industry is like a food chain, and by not allowing the cars to filter down, you're not really helping the people who are driving the real clunkers," Ruocco added.