Cash for Clunkers is also known as CARS- the Car Allowance Rebate System. The proposed law will allow consumers with older cars (less than 25 years old) to trade in their old gas guzzlers in for brand new, fuel-efficient models. This law will help consumers, car dealers, and scrap yards. The old cars will be recycled in scrap yards.
The idea is simple: drive your old car into a participating dealership- you must be able to drive it there. Trade your car in for a brand new car which qualifies for the program. You do not need to sign up for the program, but you do need to make sure you purchase your car from a qualified dealer. Many local dealers will be participating in the Cash for Clunkers program. Dealers must register for the program in order to be eligible.
Your eligible trade-in must average 18 miles per gallon or less as a “new” MPG rating. Click here for the official web site used for calculating MPG on cars, fueleconomy.gov.
The value of the new car to be bought must not exceed $45,000 manufacturer’s suggested retail price. The new car can be bought, using manufacturer’s rebates or incentives, or it can be leased for a minimum of 60 months (five years). Used cars do not qualify for the program. If the car is bought, you can finance the car using any financing you are elegible for.
The credit available for Cash for Clunkers will be either $3500 or $4500, depending on the difference in fuel economy and what type of car you are purchasing. See cars.gov for more information.
Vehicles to be traded in must be continuously insured for at least one year prior to trading them in. You will not be eligible for the trade-in value of the car as well as the government incentive. If your car to be traded in is worth more than the incentive, it would be wise to defer from participating in the program. If your car is worth more than the Cash for Cars incentive, your car probably would not be a good candidate for the scrap yard anyhow.
Be sure to check cars.gov as the proposal gets passed into law. The law is set to take effect July 1, 2009.