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The “cash for clunkers” program created as part of a military spending bill last month has been hanging in limbo for the last few weeks. The program, which effectively knocks up to $4,500 off the price of new fuel efficient vehicles if you trade in an […]

cash-for-clunkers-cars-logoThe “cash for clunkers” program created as part of a military spending bill last month has been hanging in limbo for the last few weeks. The program, which effectively knocks up to $4,500 off the price of new fuel efficient vehicles if you trade in an old gas guzzler at a participating dealer, was supposed to kick off on July 1 — but the U.S. Department of Transportation had until today to finalize rules for things like what dealers should do with traded-in clunkers. Facing such a vague framework, relatively few dealers registered to participate this month.

But as the Los Angeles Times’ Up to Speed blog put it, “Clunkermania officially begins today,” since the feds have released the final rules — 136 pages of them. So many dealers rushed to register after the document went up on CARS.gov this morning that it crashed government computers. Here’s everything you need to know about how to cash in on the program, starting on July 27.

Do I have a clunker? To qualify for vouchers under this program, clunkers must have been made in the last 25 years, so model year 1984 or later (the manufacturer date has to be shown on the driver’s side door or door jamb), and have a fuel economy rating of no more than 18 MPG (combined city and highway ratings, which you can find on fueleconomy.gov).

Can I have it towed to the dealer? No, vehicles have to be in drivable condition.

Can I trade in one of my company’s cars? Yes. According to the final rules, “individuals as well as legal entities, such as corporations and partnerships, may participate in the program.”

How much money will I get? The way this program has been set up, you won’t actually walk away with cash in hand — it’s works like an instant rebate. The government will electronically transfer money to registered dealers, who will knock that much off the price tag of your new purchase. Credits are good for either $3,500 or $4,500, depending on how much of an MPG upgrade you’ll be making with the trade in.

How about cars specifically? For passenger vehicles, if the new vehicle has a combined fuel economy that’s 4-9 MPG higher than the traded-in vehicle, the credit is $3,500. If the new vehicle has a combined fuel economy value that’s 10 MPG or more higher than the traded-in vehicle, the credit is $4,500.

What about larger vehicles, like work trucks and SUVs? For work trucks (category 3), it’s simple: they’re not rated for fuel economy by the EPA, so they can qualify for a $3,500 credit (toward a category 2 truck or another work truck that’s about the same size or smaller than the clunker) as long as they were made between 1984 and 2001. Funds for work trucks might run out before the program ends, however, since only 7.5 percent of the allotted funds can go into this category. For pickup trucks, vans and SUVs the credit amount varies by category of both the clunker and the new vehicle, so this gets a little more complicated — see this page on CARS.gov for the details, or refer to this helpful chart on fueleconomy.gov.

What do I need to bring? Qualifying clunkers must have been continuously insured for at least one year leading up to the trade in (by the vehicle owner or someone else), and you need to bring proof of this insurance to the dealer. CARS.gov recommends contacting your insurance company if your insurance card doesn’t cover the whole year. You also need a “clear” title, meaning all loans are paid off and the car is in your name only (see here for details on how to clear any “encumbrances”). According to CARS.gov, “The name on the registration must be the same as the name on the title and the same as the purchaser of the new vehicle.”

Can I buy a luxury or used car? Vehicles only qualify if they are new and have a sticker price (MSRP) of $45,000 or less.

Does the car have to be made by a U.S. automaker? No.

Can I lease a new car, or do I have to buy outright? New cars can be purchased or leased (with a minimum lease period of five years) under the program.

Where’s the catch? Your clunker might have a higher trade-in value than the government is going to ante up. If you can get more than the $3,500 or $4,500 credit available under the cash for clunkers program, you’re better off skipping the voucher.

What will happen to my old car after I trade it in? Most of it, including the engine block, must be crushed or shredded, although many parts can be removed and sold. Dealers are required to give you an estimate of the scrap value of your clunker, and they can “retain up to $50 of the scrap value of the vehicle for their administrative costs of participation in the program.” But the rulemakers warn that “Purchasers should not expect to receive the same trade-in value as they might if the vehicle were to remain on the road.”

What’s the deadline? The program is set to run until November 1, 2009, or until the allotted $1 billion runs out — whichever comes first.

Where can I learn more? CARS.gov.

By Josie Garthwaite

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  1. Looks like we won’t take part. My wife’s ancient Volvo is too old – and still gets 24mpg. And I don’t know if I could take the wrenching – parting from my loyal old Dodge pickup.

    I’d hate to think of “Ruff Boy” being parted out and crushed.

    Besides, no one – in their infinite wisdom – offers a small/medium pickup with a smallish turbodiesel in the U.S. – even though Toyota, Ford, Chevy, etc. all offer them in other countries.

    Nothing to tempt me.

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  2. I can’t get a straight answer on this. If my vehicle, 98 Ford F150, qualifies for a $4,500 voucher for the high mpg SUV that I am purchasing will I get the scrap value back less $50 in addition too when it’s picked up by the scrap yard? They are beating around the bush on this question, but I have not received a definite Yes or NO. According to the program I believe that I do.

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  3. Yeah, it will be hard pressed to use up the 1 billion. Although one could go to a used car lot purchase a car for $300-$500 and trade it in for a new car.

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  4. [...] after less than a week. When Congress allocated nearly a billion dollars for the program, which provides vouchers to help drivers pay for new, more fuel-efficient vehicles when they trade in gas guzzlers, it said [...]

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  5. [...] enters the pipeline today or tomorrow (to find out if your old clunker can qualify for a voucher, check out our FAQ). After that, it depends on what happens in the Senate. Stay tuned. [...]

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  6. [...] has almost survived the entire summer — but there’s not much left in the coffers. Launched last month, the program provides rebates of up to $4,500 for fuel efficient new cars in exchange for old gas [...]

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  7. What is the appropreate amount of cash cards for a wedding shower gift?

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  8. I was wondering where could I buy bulk affordable usb disks? Maybe India?
    Is it possible to have a special order with logo engraving on the usb disk?

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