On July 27th, people in the market for a new car can qualify for the “Cash for Clunkers” program otherwise known as the Car Allowance Rebate System (CARS). This is an effort from the federal government designed in theory, to improve your vehicle fuel efficiency by giving out rebates of up to $4500 for your old “clunker” which can be put towards the purchase of a new car. Naturally, there are multiple stipulations for you to qualify for this program.
- Your trade-in vehicle must average 18 miles per gallon or less
- The trade-in vehicle must be less than 25 years old
- You must purchase a new vehicle that is $45,000 or less
- There must be a 10 mpg improvement to receive the full $4500 credit otherwise you receive $3500
- The trade-in must be drivable and have been owned and insured for one year
Although the program has received a lot of press, a limited amount of new purchases will qualify for the rebate. SUV or truck owners looking to purchase a new car will be the group most likely to benefit. That’s bad news to all the car owners who were thinking this deal would sweeten their upcoming vehicle purchase, even if their intent was to dump a 20 mpg car for a similar, much more fuel efficient 35 mpg car. You can check your car’s average mpg at http://www.fueleconomy.gov/feg/findacar.htm.
Before agreeing to participate in this program, you’ll want to check your car’s trade-in value to verify that it will not be higher than the CARS program can offer you. Participating in the clunker program means you forfeit any amount over the $4500 as the car is required to be scrapped. You can go to ww.kbb.com to get an idea of your car’s current trade-in value.
Despite the restrictions, there’s no doubt the program has generated a healthy buzz about new car sales, which should help an industry that took a punch in the gut during the latest recession. The government rebate also motivates car companies to add extra incentives. Chrysler has already jumped the gun by offering to match the CARS rebate towards the purchase of a new Chrysler, Dodge or Jeep vehicle.
Be aware that you’ll need to make a decision fairly quickly as the program will end on November 1, 2009 or when the $1 billion budget allotted to the program runs out.
