Given the attention around the new "Cash for Clunkers" plan, we've rounded up the most common questions and answer them here:
What is Cash for Clunkers?
President Obama signed into law The Consumer Assistance to Recycle and Save and Act, aka H.R. 2751, in June of 2009. The part of the law that pertains to the Cash for Clunkers is known as The Car Allowance Rebate System (CARS), which should go some way toward stimulating new car sales in the U.S. The new law means that consumers can trade in old cars for new ones and in the process receive a rebate from the government.
What is the rebate I'll receive?
If you trade in an old car for a new car and both your trade-in and the new car qualify, you can receive from $3,500 to $4,500 in a government rebate.
How is the rebate paid to me?
The rebate is first cleared by the dealer, who receives an electronic funds transfer from the government at the time you're buying or leasing your new vehicle. The rebate (whether it's $3,500 or $4,500) is applied to your down payment on your new vehicle. This means that the rebate isn't "cash in hand," it is simple deducted from the price of the new vehicle.
What old cars qualify for Cash for Clunkers?
The old vehicle traded in must get 18 mpg combined or less, have been built in 1983 or newer and must have been registered in your name for at least 12 months. Check to see if your trade-in car qualifies by looking up your fuel economy rating on FuelEconomy.gov..
What new cars qualify for Cash for Clunkers?
New cars and trucks qualify, but only at a certain miles-per-gallon threshold. For example:
If the new vehicle is a CAR or MINIVAN: A new car or minivan must have a minimum of 22 mpg combined. If the difference in mpg between your new and old vehicle is 4 mpg - 9 mpg, you receive a $3,500 rebate. If the difference is 10 mpg or greater, you receive a $4,500 rebate.
If the new vehicle is a LIGHT DUTY TRUCK: Light duty trucks are considered vehicles such as trucks and SUVs that weigh less than 6,000 lbs. The new light duty vehicle must get a minimum of 18 mpg. If the difference in mpg between your new and old vehicle is 2 mpg - 4 mpg, you receive a $3,500 rebate. If the difference is 5 mpg or greater, you receive a $4,500 rebate.
If the new vehicle is a HEAVY DUTY TRUCK: If you're looking to buy a vehicle that weighs over 6,000 lbs (considered a heavy duty vehicle), that truck must achieve at least 15 mpg. If the difference in mpg between your new and old vehicle is 2 mpg - 4 mpg, you receive a $3,500 rebate. If the difference is 5 mpg or greater, you receive a $4,500 rebate.
Can I buy an old car and immediately redeem it for a discount?
You can't, because the discount is only available if you've had the car registered in your name for one year or more.
Do I need to turn my car in?
No, this is not a government mandate; the "Cash for Clunkers" program is not mandatory.
My car is worth more than $4,500, so will I receive $4,500 plus the value of my trade-in?
No, the total amount you might be eligible for is $4,500. By opting for the "Cash for Clunkers" plan you opt out of the trade-in value for your car. This is important to consider if you have a used vehicle that is worth more than $4,500; you'd be better served selling the car on your own or doing a dealer trade-in to receive the maximum amount of money.
Does my trade-in need to be in running condition?
Yes, the vehicle must be running.
What happens to my "clunker"? Will it be sold?
No, all trade-in vehicles will be crushed.
Can I combine this with another rebate offer?
Yes, you can. The "Cash for Clunkers" rebate could be combined with an alternative fuel tax credit as well as other manufacturer discounts.
Does this expire at any time?
Yes, under the war spending provision (the larger bill within which the Cash for Clunkers program is a part) will expire on November 1.
Is this for leasing or just purchasing a new car?
The program applies to both leasing and purchasing. However, if you're leasing, the term of the lease must be at least 60 months (five years).
Who determines if my old and new vehicles qualify?
The dealer will determine if you old and new vehicle qualify for the Cash for Clunkers rebate.
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