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“Cash for Clunkers” Program Allows for Trade-in of Fuel-Inefficient Vehicles

| Saturday July 11th, 2009 | 2 Comments

SUV-clunker

Consumers and auto dealers alike are enthusiastic about a new $1 billion “Cash for Clunkers” bill signed into law by the Obama administration in June. The bill created the CARS (Car Allowance Rebate System), which credits between $3,500 and $4,500 to consumers who swap aging, gas-guzzling vehicles (including SUVs, vans, and pickup trucks) for newer, more fuel-efficient models.


For a vehicle to qualify, it must have been built since 1984 and have gas mileage of 18 miles or fewer per gallon. Vehicles must also be continuously insured and registered to the same owner for a full year prior to the swap. When a consumer takes the vehicle to a participating dealer, the dealer assesses and applies the discount and then obtains reimbursement from the government. (Per a federal plan created in March, buyers may also deduct state and local sales taxes in their 2009 tax returns. Many auto makers offer additional cash-back and cut-rate financing deals.) To prevent fraud, the program requires that consumers provide proof of identity and that dealers crush or shred the vehicles to prevent resale.
Automobile dealerships and consumers who are already implementing the program describe numerous benefits. The program is helping foster environmental consciousness, jump-start the auto industry, get potential buyers in the door, and assist consumers financially. Some dealers expect the program will increase their total volume by as much as 20 percent.
The government will disclose the program’s full rules July 24.


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  • Marty Kilroy

    Just great! More of my money going to those who didn’t make wiser decisions earlier. I bought a fuel efficient car 3 years ago. Are they going to reward me for using good judgment?

  • raichle

    Marty – I feel the same way, heck I’ve never owned a car in my life, but what else can we do? I think we should just make gas cost $4 a gallon. The problem is it’s politically impossible, so this is the best we got.

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