I had an interesting conversation about the Cash For Clunkers program with someone in the new car business a few days ago, and he confirmed what I had already suspected... quite a few people who did the clunker deal didn't come out as well financially as they thought they did.

First, a national study released Friday reveals that dealers on average are giving lower discounts off of sticker price for the new cars purchased under a clunker deal than they had been giving normally. Some folks were paying from $1000 to $3000 more for their new car than they should have, but were blinded by that $4500 clunker rebate.

But it gets worse... under the plan, when you turn in a clunker, that $4500 is all you get for your used vehicle, even if the NADA guide or KBB says your trade is worth more. You may have seen pictures of some of the vehicles that consumers turned in as clunkers and some didn't look that bad.

My car business friend said he had several vehicles come in as clunkers that they would have normally given much more than $4500 as the trade in value, but the customers had it so firmly etched in their head that they had a clunker and by George it was worth $4500, so that's what they got.

So do the math, you pay more for the car than you normally could have hammered out a deal for plus you get $4500 for your old car when you might have gotten a lot more as a regular trade-in than as a clunker.

Here' another aspect that also concerning... a substantial number of people doing the clunker deals really shouldn't have been buying a new car right now... especially in this bad economy. My buddy says he wouldn't be surprised to see quite a few loan defaults in coming months from these clunker trades.

Plus since the clunker trade-ins have to be destroyed, some experts are now saying the supply of good used cars will shrink enough to drive up prices substantially, and since used parts can not be salvaged from the clunkers for refurbishment and reuse, prices for car parts will also artificially rise. Just about any way you look at it, this clunker program was a dud, and once it's over in a few weeks... I'll bet you a box of donuts that new car sales will crash.

But look on the bright side... even if you sat tight and skipped the clunker frenzy you'll still get taken for a ride, because if you're a taxpayer you're picking up the tab.

That's my opinion, we welcome yours... Thanks for listening and I'll see you next Monday... for a complete transcript of this morning's comments, go to NewsTalk1270.com (End of complete transcript of commentary that aired on NewsTalk AM 1270 - WYXC at 7:35 AM Monday, August 17, 2009)