Cash for Clunkers increases difficulty of auto financing

The 2009 Cash-for-Clunkers program was intended to stimulate the economy by providing a $4,500 credit to buyers of new vehicles if they traded in their old ones. These trade-in vehicles were destroyed, creating a shortage not only of used cars, but replacement auto parts as well, according to the blog It Lacks a Human Pulse. For example, according to Kelley Blue Book data, the average private party value of a 2008 Mazda 3 increased from 27.6 percent to 44.1 percent per annum since November 2010. This price-hike means auto financing for low-income buyers has become harder than ever, and many people may decide to forgo purchasing a vehicle altogether. In an effort to combat the growing concern over vehicle prices, the U.S. Senate recently voted overwhelmingly in favor of eliminating a 45-cent-per-gallon tax credit on ethanol gasoline, as well as a 54-cent-per-gallon tariff on imported ethanol, the Huffington Post reports. "Today's vote was a major victory for taxpayers and a positive step toward a serious deficit reduction agreement, which is our only hope of averting a debt crisis," said Oklahoma Republican representative Tom Coburn in a statement, quoted by the news source.