Cash for Clunkers may not make new cars affordable for all

A program being considered by several states and the federal government to offer thousands of dollars in vouchers for citizens who traded in vehicles during new car purchases may not benefit many Americans of modest means according to some critics.

The amounts being considered, $3,000 to $5,000, could provide some impetus in new car purchases, writes economist Steven Leavitt in a blog post for the New York Times, but he says that most people who own older cars are more likely to buy used cars as replacements.

He is joined by Aaron Lowe, vice president of government affairs for the Automotive Aftermarket Industry Association, who says that the program would “limit access to affordable transportations” for families who can’t afford new car prices, even with a voucher.

According to Comerica, a bank that offers new car loans, the average price of a new car was $29,000.

Although used car prices have risen slightly, according to a price index released by Manheim Consulting, a substantial number of cars were sold at prices between $8,000 and $12,000 at auction.

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