Wednesday, July 1

Cash for Clunkers facts about the CARS program

Everyone is talking here and there about the Cash for Clunkers program. But it still remains unclear as to what it will do and just what makes your car a clunker. What the program offers and why you should or should not use it. What you have to do and what you have to expect to get the maximum out of it.

While the official rederick is quoted as "President Obama signed into law a program National Highway Traffic Safety Administration (NHTSA) is calling the Car Allowance Rebate System (CARS). This is a government program that helps you purchase a new, more fuel efficient vehicle when you trade in a less fuel efficient vehicle."

The reality of the Cash for Clunkers or CARS program is not so cut and dry. Nor is it going to be the saving grace for the auto industry that it is being portrayed and hyped up to be.

While the CARS Act makes new vehicle purchase and lease transactions on and after July 1 of this year (that's today folks) potentially eligible for credits under the CARS program, those who are interested (both dealers and consumers) may want to wait until all of the details are addressed, the regulations are implemented, all the gray areas are addressed and resolved prior to shopping for that new vehicle.

Currently they expect the final rules to be in place around the July 23 mark.

How the program works and what it will do for you - well that depends.

There are some guidelines for this program that you do need to keep in mind:

Your vehicle must be less than 25 years old on the trade-in date

Only purchase or lease (Lease period must be shorter than 5 years) of new vehicles qualify - Used vehicle purchase does not qualify

The purchase price cap is set at $45,000 for this program so any vehicle that costs more is excluded from this program.

Generally, trade-in vehicles must get 18 or less MPG (some very large pick-up trucks and cargo vans have different requirements)

Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in

You do not need a voucher and you are not required to sign up or enroll in this program. Participating new car dealers will apply a credit, reducing the price you pay at the time of your purchase or lease, provided the vehicle you buy or lease and the vehicle you trade in meet the program requirements. The dealer will then obtain reimbursement from the government.

Program runs through Nov 1, 2009 or when the funds are exhausted, whichever comes first.

The vehicle that you are trading in is required to be destroyed. This will mean a lower inventory of used cars that will be returning to the market from trade. This also means that the trade value you negotiate with the dealer for is not likely to exceed the vehicles scrap value. (The law will require the dealer to disclose an estimate of the scrap value of your trade-in vehicle)

How does it all work?

Here is what they currently call the 6 steps of the Cash for Clunkers or CARS program:

1 Visit for current information about the program and the current list of participating New Car Dealers. (The law requires dealers to be registered to participate in the program. As dealers are registered they will be listed on the website.

2 Determine if you qualify for the program, then shop for a new car.

3 Bring the title, registration and insurance papers showing continuous registration and insurance coverage for the past full year along with you tot he dealership.

4 When you buy or lease a new vehicle, the dealer handles the submission of all required information to NHTSA.

5 NHTSA ensures that your purchase meets the requirements.

6 About 10 days later, NHTSA will issue a financial credit to the dealer—assuming all program requirements have been met.

But how do you know if your trade in vehicle is even eligible?

Your trade-in vehicle must have been manufactured less than 25 years before the date you trade it in.

It must have a "new" combined city/highway fuel economy of 18 miles per gallon or less. I will explain more on this a little bit later.

The vehicle must be in drivable condition. Walking or rather rolling wounded will pass.

It has to have been continuously insured and registered to the same owner for the full year preceding the trade-in date.

The trade-in vehicle must have been manufactured not earlier than 25 years before the date of trade in.

How to determine your New Combined Average Fuel Economy

Go to (yes that's right, yet another new government run website) and select the model year of your vehicle, then the make, and finally the vehicles model.

Under the words "ESTIMATED NEW EPA MPG" in the red banner, there is a red number with the word "COMBINED" under it. That is the new combined city/highway fuel economy for your vehicle. You may then enter the make, model, and model year of a new vehicle you may want to buy and see what its combined MPG for a comparison.

You can edit the highway and city driving percentage if you go into the advanced edit tab - you can also edit the cost of fuel to see what your cost of ownership will be.

So How Much Will I get?

The amount of the credit is $3,500 or $4,500, and generally depends on the type of vehicle you purchase and the difference in fuel economy between the purchased vehicle and the trade-in vehicle. The difference depends on your average fuel economy increase as to which level of the credit you get. Aim for 10 mpg or better and you should be fine.

If the new vehicle has a combined fuel economy that is at least 4, but less than 10, miles per gallon higher than the traded in vehicle, the credit is $3,500.

If the new vehicle has a combined fuel economy value that is at least 10 miles per gallon higher than the traded-in vehicle, the credit is $4,500.

Different requirements apply for work trucks


  1. Anonymous2:45 PM EDT

    You probably should clarify that the car *can* cost more than $45000, but its MSRP cannot be more than that.

  2. Anonymous7:30 PM EDT

    Continuous registration means if you were one day late, even if there is a grace period, with your annual tabs, you are out. I don't think that was the intent of the legislation but that is why I was rejected.

  3. Anonymous3:26 AM EDT

    How can being 1-2 days lake on buying tabs throw you out of the program? With a grace period? If the car wasn't registered to me for 2 days, then who WAS it registered to for those 2 days? I bought a car on Monday and they tell me on Saturday that the cash won't come because of this. Shouldn't the dealer know how the program works before selling a car?

  4. Anonymous7:23 PM EDT

    Well cash for clunkers did remove a ton of Obama bumper stickers from our roads.


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