Overview of Cash for Clunkers

To wrap up Transportation Week, I considered writing a post about buying vs. leasing cars, but I think that would be a rather lengthy discussion that deserves spotlight all on its own. So instead, I decided to bring you some current events in the world of transportation by talking a bit about the new “Cash for Clunkers” program.

Cash for Clunkers (officially known as the Car Allowance Rebate System, or CARS) is a government-sponsored program to improve the overall fuel efficiency of vehicles on the road today.

In simple terms, CARS cuts you a check if you upgrade your old gas-guzzler to a more fuel-efficient vehicle.

Here are the details:

  • The program will run until November 1st or until the money is gone, whichever comes first.
  • CARS was signed into law and is administered by the National Highway Traffic Safety Administration (U.S. Department of Transportation).
  • It’s suggested you wait until July 24th to take advantage of this program, so that all the kinks of implementation are worked out.
  • The program only applies if you buy a new car (kind of negates yesterday’s post), and don’t spend more than $45,000.
  • Taking advantage will be as simple as letting the dealer know you want it. Dealers will discount the price you pay, and recover the cash from the government themselves. It’s a clean cut – you don’t have to deal with taxes or anything else on the rebate.
  • If you current car is less than 25 years old and had an MPG of 18 or less when new, you probably qualify. That is a combined city/highway MPG. This site lets you check your new combined MPG.
  • You also must have owned the car for at least a year, so don’t run out trying to buy a clunker just for kicks.
  • You can either get a $3,500 or $4,500 credit, which depends on by how many MPGs you improve your gas milage.
  • Your trade-in car will be destroyed, so the dealer will only pay you the “scrap” value for it. Be careful if your car is still worth a good amount of money!
  • There are other requirements (such as for work trucks), so check into the details before you go after this deal.

For more information on CARS, visit cars.gov, the official program website.

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6 thoughts on “Overview of Cash for Clunkers

  1. Most cars will not qualify for a cash for clunkers voucher. They will, however, be eligible for a tax deduction as a charitable car donation.

    1. Car donations are a good alternative for those readers seeking to itemize and maximize their deductions at the end of the year. It will also warm your heart, of course…

      In clarification of Karen’s comment, “most” cars are indeed more efficient than 18 MPG. The bill is targeted to “clunkers” after all…so check your milage to see if you qualify, and conisder donations as an alternative.

  2. Pingback: Money Hacks Carnival #73: Working For The Weekend Edition | Money Beagle
  3. Update (July 31st): It’s now being reported that CARS may have run out of money, only one week after being officially implemented.

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