How to Cash Your Clunker

After weeks of debate and legislative gamesmanship—several versions of this bill have been passed or voted on in both houses of Congress, with lawmakers eventually attaching it to an unrelated military funding bill—”Cash For Clunkers” is finally one step away from becoming law. Officially called the Consumer Assistance to Recycle and Save Program (CARS), the law made its way to President Obama’s desk yesterday, backed by $1 billion in funding that is designed to stimulate the sale of 250,000 new cars and trucks in the next year.

The bill has plenty of critics on both sides of the aisle. Not as many people will be eligible to benefit as would under previous versions, and the required fuel efficiency improvements are minimal. But for those driving true relics and dealing with rising prices at the pumps, an extra few thousand dollars on top of the steep discounts dealers are already offering may finally make this the right time to buy or lease a new car.

How to Take Advantage

Ground Rules

In order to take advantage of this incentive, you need to own a vehicle with relatively low fuel economy. For cars and minivans, that means an 18 mpg or less EPA combined city/highway rating. For SUVs and light trucks that number is 16 mpg—large light-duty trucks weighing over 6,000 pounds must get less than 15 mpg.

Depending on how much mileage improvement the trade-in nets, consumers will receive vouchers for $3,500 or $4,500.

  • Passenger Car or Minivan:

    $3,500 Voucher: New vehicle must be a 4 mpg improvement.

    $4,500 Voucher: New vehicle must be a 10 mpg improvement.

  • Light-Duty Truck:

    $3,500 Voucher: New vehicle must be a 2 mpg improvement.

    $4,500 Voucher: New vehicle must be a 5 mpg improvement.

Getting the money

The CARS program isn’t a tax deduction or rebate—nor is it something that you have to spend the day at the DMV filling out paperwork to get. All of the work will be handled by car dealerships and the government, so all you have to do is turn in your clunker—along with its title, registration, and insurance papers. After the government verifies that everything is in order, a credit will be sent to the dealership which will pass the money on to you in the form of a discount.

No clunker-flipping

Much of the criticism of the program leading up to its ratification came from skeptics who were concerned that a whole new market for junk cars would emerge from those looking to pay $1000 for a car they could later trade in for $4500. The final legislation has ensured that those fears won’t become a reality.

All trade-ins must have been owned and insured by their current owner for at least a year and be in working order. For now, the program is designed to last only one year, making it pretty much impossible for prospective buyers to con the system.

Act sooner rather than later

Initially the CARS program was slated for as much as $4.5 billion in funding, which would have allowed more than a million vouchers to be issued. The trimmed down version that currently awaits President Obama’s signature is expected produce only around 250,000 vouchers, meaning that all of the money could be gone quick depending on how much interest the program generates.

While it is possible that more funding could come further down the line, given the struggle that this bill faced to even get passed and the host of budgetary commitments facing Congress and the Administration, don’t hold your breath.

Disclaimers

  1. Fuel-sippers need not apply

    If your old car already gets decent fuel economy, you’re out of luck. The clunker needs to suck down fuel at a rate of 18 miles to gallon or worse.

  2. You don’t have to buy

    The incentives apply equally whether you purchase or lease.

  3. No Tesla Roadsters or other high-end vehicles

    New cars whose sticker prices exceed $45,000 are ineligible for the program no matter how eco-friendly they may be.

  4. SUVs for cars okay

    Provided that the old and new vehicles qualify for the trade-in within their class, consumers can upgrade an SUV for a more fuel efficient car, or vice-versa.

  5. No antiques

    Only cars produced during or after model year 1984 can be traded in.


  • qqRockyBeans

    Read this article about how the Cash for clunkers program is stupid and ineffective:

    http://www.caranddriver.com/reviews/hot_lists/car_shopping/latest_news_reviews/five_reasons_cash_for_clunkers_is_a_joke_car_news

  • Dee

    Lovely. Looks like this bill will become “law” this week.
    My old Camry is spewing out exhaust thanks to its crappy exhaust problem, but I’ll continue driving it around to pollute my city for years to come — although I gladly would have gotten rid of it if I hadn’t fallen through the cracks on this one.
    Hmm… wonder how many other cars there are like mine out there…

  • moishe k

    What a joke

    How many cars do u know, with EPA rating of 18 MPG or less ?

  • qqRockyBeans

    Can anybody answer a couple questions for me about this?

    1) Is 18 MPG included in the rebate?

    2) Does this go by the new ratings, or the old?

    For example, the Lexus ES250 gets 20 mpg original 1990 ratings, but 18 when converted to the new standards

    It’s a moot point anyway, since I can’t afford a new car anyway

    I’d get me a Kia Soul with a sunroof

  • ACAgal

    Oddly my 1993 vehicle gets better mileage than the same vehicle of the current generation. Thus it is the one that gets driven. I keep it in top condition so it doesn’t spew.

    It everyone payed attention to what they so carelessly spewed into the air and water, life could be more livable without government interference. Shortsighted SPEWERS as companies that make dirty products, are the reason common courtesy and good sense has to be legislated. The shortsighted, stupid, and greedy ruin it for those who try to do unto others as they would have done onto them..

  • TC

    Great. The crappy Pontiac Torrent that I’ld love to get rid of is rated at 19 MPG. I’m SOL.

  • steved28

    I may be the only one, but my 97 F-150 is taking full advantage of this so my daughter can get her new car for college.

  • leea

    But is your ’97 F150 worth less than $4500? You don’t get a trade in value plus the $4500 — you only get the $4500…

  • Anonymous

    Can anybody answer a couple questions for me about this?

    1) 18 MPG IS included in the rebate !!!

    2) New ratings

    Very few cars qualify most owners of a 2001 or older car can’t afford a new car even with a few extra $$$ from uncle ScAM

  • Rmenda

    I would probably qualify to upgrade my SUV.. But can’t afford NEW payments.

  • moishe k

    To Rmenda

    If you understand what joke this program is, you are to smart to be a USA lawmaker

  • Barbara

    I guess I am the only happy one. My 1999 Town and Country needs over $1500 to pass my July inspection. It gets 18 miles to the gallon and I am happy to be able to skip that and get a new car. I sweated the 18mpg requirement going up, and feel sorry for any one who gets just 19 or 20. I have maintained my car but tires, muffler and brakes all happen eventually to need replacement. Look to the older folks to take advantage of this new break. Not many of us have payments on ten year old cars that have trade in value of about the amount I need for repairs.

  • Ronk

    What options does the dealer have for this clunker?? Can he sell it to another buyer??

  • qqRockyBeans

    at Ronk:

    NO!!!!!!!!!

    The dealer CANNOT sell it to another buyer
    They MUST junk it!!!!!!!!!!!

  • steved28

    leea,

    My 97 F-150 is on it’s last legs. It’s had a hard life, towing, hauling, lots of snowy winters in Mass and Maine, all the stuff a PU is supposed to do. This is a great deal for us, I possibly could have got some kid to pay $1500 for it, but I would not have felt good about it. It’s starting to show some serious body rot now and the rear brakes are disables (rusted line). It’s time.

  • Austintatious

    If I’ve got it right, this bill is NOT a cash for clunkers measure, nor is it ia legitimate effort to improve fuel efficiency, across the board. It is an American auto company and Congressional boondoggle, and it should have been vetoed by the President.

    If I own a car that gets 17 mpg and I replace it with a car getting 27 MPG, I can benefit from a $4,500.00 tax credit.

    If I own a car that gets 26 mpg and I replace it with a hybrid that gets in excess of 46 mpg, as I have recently done, what tax incentive do I get? Zero, nada, absolutely nothing, despite beating the first example by a net mpg gain of 100%.

    Folks, that’s neither intelligent nor fair. It’s just another boondoggle.

  • Random

    I have one! A beautiful 1995 Lincoln Continental ~ seats are cushy and it rides like a dream. All the luxury items still work on it too! Not even a dent….bought it a couple of years ago when gas was cheaper.
    gas mileage? hahaa….16 on the highway….running around town doing errands……..try 12 if I’m lucky and don’t hit too many red lights!
    Job hours just got cut in half and I can’t finish paying for it now…….LOVE THIS NEW LAW on a personal level!

  • RKRB

    The August 09 issue of Automobile magazine has an interesting article on the Cash for Clunkers bill. Given the bill’s laughably negligible efficiency gains, the author makes a good point that it is probably more of an effort to get unwanted (and unnecessary) cars moving off the lots to stimulate the economy. The goal is to get us to achieve a goal by wasting money, which is the government’s solution to problems.

    “Honest Obama’s Car Lot.” Stimulating the economy by stimulating consumption is one of the things that got us into this mess in the first place.

    The article makes the usually accepted erroneous assumption that the Government, or the Administration, or the Congress is paying for this program. Unless they are dipping into their own pockets to pay (which is MOST unlikely), the Government or the Administration or Congress are doing absolutely nothing of the sort. The American taxpayers (and our children, and our Chinese and other foreign creditors) are paying for this program.

  • Joe

    I am trading in my POS Toyota 4runner that gets 12 city 13 hwy, blew a head gasket at 108,000 miles. Oh, what not a feeling Toyota! I wont be buying a Toyota! I am taking the $4,500.00 while it is still running and cut my losses!

  • geremy

    As we all know by now the program was a real success and I am glad it was. A lot of people got the change to renew their cars on a good price. I am curious though how the auto insurance companies were impacted by the program.

  • alix

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  • Anonymous

    I am very much upset to see the heap of old vehicles in waste. I can easily speculate the waste of raw materials, degradation of environment and of course waste of huge amount of money. In fact, we can repair, reuse or reconstruct the waste. I am taking advantage of car loans Indianapolis to get used car in affordable price.

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