July 24 2009|12.21 PM UTC

David Tu

Details: Cash for Clunkers Rules

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If you’ve been waiting at the edge of your seat for the finalized rules on the “cash for clunkers” program, then today is your lucky day.  The National Highway Traffic Safety Administration has finalized and released the final rules for the $1 billion program to trade in your old vehicle for a credit of up to $4,500 towards a new vehicle.  Below you will find some quick details, caveat, and lowdown you should know if you’re interested in the cash for clunker program.

The Car Allowance Rebate System (Cash for Clunkers) In Brief

Starting on July 24, 2009, car buyers will be able to take advantage of the CARS program and receive a $3,500 or $4,500 discount from the car dealer when they trade in their old vehicle and purchase or lease a new one.

Important Cash for Clunker Facts:

– Your vehicle must be less than 25 years old on the trade-in date.
– Only purchase or lease of new vehicles qualify for the program.
– Generally, trade-in vehicles must get 18 or less MPG (very large pick-up trucks and cargo vans will have different requirements).
– Trade-in vehicle must be registered and insured continuously for the full year preceding the trade-in.
– You don’t need a voucher of any sorts, qualified dealers will apply a credit at purchase.
– You will be eligible for any other advertised rebates or discounts by the dealer in combination with the credit you receive through the CARS Program.
– Program runs through November 1st, 2009 or when the funds are exhausted, whichever comes first.
– Just added rule: The program requires the scrapping of your eligible trade-in vehicle, and that the dealer disclose to you an estimate of the scrap value of your trade-in. The scrap value, however minimal, will be in addition to the rebate, and not in place of the rebate. (Dealers are allowed to keep $50 of scrap value to cover their administrative cost).
– Only new-car dealers can issue the credit, and they must have an active franchise agreement with the manufacturer.  This means that used-car dealers can’t issue the credit, nor can any new-car dealer that has lost its franchise (e.g., many recent Chrysler and GM dealers).

What You Need to Bring to the Dealer:

– Proof of Registration going back at least 1 year.

– 1 Year Proof of Insurance. If your insurance card does not cover the entire year preceding the trade in, you will need other proof of insurance. Contact your insurance company to get evidence of 1 year worth of insurance. The form must include, at a minimum, the insurance company, policy number, VIN, start and end date of insurance (showing at least 1 year).

– “Clear” title. This means the title must be free of any liens or other encumbrances. If you have liens, you need to get these cleared before going to the dealer. This may include evidence on the face of the title showing no lien; that the title has been cleared (signed and stamped accordingly), or with an attached lien release from the lien holder.

– The vehicle manufacturer date found on the driver’s door or door jamb is less than 25 years old when you trade it in.

Is Your Old Clunker Eligible for Trade-In?

As you may have noted above, only vehicles less than 25 years old that gets 18 MPG or less can qualify for the CARS program. Luckily for everyone, there are two great resources you can check to see if your vehicle qualifies for the “cash for clunker” program.  Edmunds.com has compiled an large list of eligible trade-in vehicle list, and has saved you time by omitting vehicles with trade-in value better than$4,500.  Because each individual may still different in its trade-in value, you can check the official CARS website to see if your vehicle is eligible by visiting the eligibility tool the government has setup (be warn that the site may be slow to load as its under heavy usage).

Beware of Cash for Clunker Scams

The official name of the program is called “Car Allowance Rebate System,” and there is only ONE official website from the government, the NHTSA’s CARS.gov website.  As per rules listed out above, you DO NOT have to register or apply for any part of the program, those are done on the dealer-end, so beware of any official sounding websites asking for your personal information.

Still Confused?  Get Official Answer from the NHTSA

The NHTSA’s CARS.gov website will have majority of the information you’ll need.  The full FAQ can be found at www.cars.gov/faq.  You can also call the CARS Hotline at 1-888-CAR-7891 or the TTY/TDD line for the hearing impaired at 1-800-424-9153. If you’re a dealer and you’re looking for more information, check out cars.gov/dealersupport for more details.

top photo credit: youngthousands

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{ 11 comments… read them below or add one }

frankania July 27, 2009 at 6:00 am

This will RAISE the prices of used cars in general.
It will DESTROY many usable vehicles and make them worth zero.
All money aside, when a society destroys useful things, it gets POORER


BP July 27, 2009 at 6:11 am

I’m interested in the Cash for Clunkers because I have a ’99
Dodge Ram 4×4 that probably needs replaced. However, since this is a govt. program, I’m very leary. My fear is after they rethink this program, they will tax the rebate as income. Do you think that the govt rebate will be taxable?


Jim Mount July 27, 2009 at 6:36 am

“Cash for Clunkers”…….. not a good name at all. I could have a Toyota Corolla or a Chevy Cavalier ( and many many more ), that gets great gas mileage but is truely a piece of junk in so many ways, burning oil, engine problems, electrical problems, etc. but this will not qualify. If on the other hand I have a large SUV or large car that may be in pristine shape but gets less than 18 miles per gallon it is considered by the government as a “clunker”. Lets be real American, another plot by the Democratic controls Congress to get us out of large cars and SUV’s. If I had one of those large vehicles and it was traded in , the car would be crushed while the real junk cars are still on the road….what is wrong with this picture. Luckily for me my 2000 Bonneville SSEI with the supercharged V-6 ( and I may add is in great shape and still getting nice comments ), gets better than the 18 mpg overall, but you will never catch me trading it in for a small car, but that is just me and many Americans will do whatever the government dictates no matter what the outcome.
Just my opinion, but my Bonnie will never be traded to be crushed !!!!!!


Peter July 27, 2009 at 12:59 pm

This program originated in Germany to stimulate the auto industry and it worked. England has followed suit and now the USA. It was a this program combined with a much smaller economic stimulus package that has been toughed as a better step in the right direction compared to the US with programs aimed at the general populous as opposed to just banks. It appears the England & USA is copying Germany’s model of success. I guess the Obama trip to Berlin my pay off after all!



Jerry July 27, 2009 at 8:32 pm

I agree, Jim – BO and the greenies will have us all driving little putt-putt “smart” cars if they get their way. Long live the muscle car!


Steve July 28, 2009 at 10:32 am

Peter – If you mean that the program in Germany worked to sell more cars now and then will cause sales to crash later when the rebate expires then, yes it is working. It also transfers tax dollars from responsible people to irresponsible people and the auto industry. This program also increases the cost of used cars for those who wish to live within their means and not run out and buy a new car on credit during a recession. It sounds like a great success in big government waste. I sure am glad we copied the Germans on this.


Brian July 31, 2009 at 8:24 am

All of you have excellent points. And I have been swayed. I own a 1994 Buick Roadmaster, It gets 26-28 MPG Highway, full Blue leather bucket seats, V8 5.7liter, OEM Concert II sound system, Odometer 135,000 miles, Dynoride, and it runs as quiet like sleeping kitten purring. I drive mostly highway miles. Guess what? IT QUALIFIES as a $4500.00 Clunker. Isn’t pathetic. Bottom line, we are a self governed
republic, and we let them these elected politicians do what ever they conspire to do. I recommend, grass roots organization and start with your freinds, neighbors, and family. Use the same method a childrens sports team uses to assemble. Make a list and when you are called,you in turn call the person listed below your name, with the person an the bottom of the list calling the top person to complete and confirm the chain. Once assembled, make a list of what you what to accomplish, and follow-up with a single solgan, citizenship requires active participation, and place responsibility and accountability on our elected officials.
. . . (sorry no spell check avail, jk)


Pam August 1, 2009 at 1:13 pm

The government’s mileage list is all messed up. According to the official website, my 92 Ford Probe LX with 3.0 liter 6 cyl engine gets 18 mpg. In actuality, I get about 27 around town (“combined”) and up to 37 on the highway. It drops down to 23 or 24 only when it’s having serious engine problems and pops right back up after I get it serviced. I know these numbers are accurate because there is an on-board computer to track it. It’s a 2 door hatchback and I can haul a lot of stuff in it. It’s fun to drive. I have enough power to get out of the way of big trucks that don’t see me (I sit low to the ground). It looks like a smallish sports car — lots of “style”. But in reality, it’s a compact with a nicer engine.

So…this car “qualifies” for the program. Under the CARS program, I can get $3500 towards a car that gets around 22-23 mpg (with a new $350-400 car payment) that would be a comparable car, maybe, or $4500 towards a smaller car that gets 28 mpg, if I can find one, with probably just as big a payment…but I’ve lost the ability to haul stuff around. Either way, I end up having to come up with $350-400 a month to participate!

Really, this does not make financial sense for me to do…but parts to keep my car (now over 265K miles) going will get more expensive if other Probe drivers turn their cars in under the program.

I don’t like it!

Maybe if it allowed you to buy a new-ish used car, maybe I could afford that. But the way it’s set up is so flawed, I don’t even know where to begin.

But for one thing, affordable, decent used cars will become harder to find.


Rook August 2, 2009 at 8:41 am

I’ve seen a news broadcast that states that if you click on the .gov website there is a disclaimer that will allow them to look into your computer anytime they choose. Sounds like a new way to gain more gov intrusion into our personal lives. Also as far as the comment about how we copied the program from the Germans, hmmmm remember them they started WWII with Socialism. I agree with the other comments about cars that get good mileage and are bigger being mislabeled as “clunkers” and the fact the even if you do take advantage of the program, guess who will eventually get to pay (taxes) for it. YOUR CHILDRENS CHILDRENS CHILDRENS …. to infinite. And as far as the question about if the gov will tax the rebate, you can bet your life on it. It will be considered as an income source, but you won’t see that until next year when you pay for your taxes for 2009 when they send you a letter letting you know that. Again remember this is a Socialist program created by the tax minded leftists liberals. No free rides folks.

Please remember you are a CITIZEN of your STATE that is in a REPUBLIC. This is not a Democracy…… and the Federalists were never ment to have the power over our lives that they have incrementally usurped.


chad August 5, 2009 at 7:57 pm

Govt offers up to 4500 dollar rebate to destroy a perfectly good (in most cases) paid for vehicle, BUT you must buy a new car that will lose 6000 dollars in value the instant you drive it off the lot and lose approximately half of its value by the end of the first year, saddle you with a 350-600 dollar a month car payment for anywhere from 60 to 84 months… hmm not to mention that the govt has to borrow this 1 billion dollars to fund this stupid program because we don’t HAVE it and after a week and a half its already bankrupt. How many stupid things can we do at one time?

Assuming you buy a new car with this rebate and qualify for the full 4500… assuming gas is 2.50 a gallon for the next year. Your new car would have to have such a mileage increase that you’d save over 800 gallons a fuel just to break even after factoring in the new car’s depreciation after one year. (assuming depreciation is $6500 in the first year, subtract the $4500 dollar govt rebate gives you $2000 x 2.50 a gallon = 800 gallons of fuel) now lets assume you get 15 mpg on the old car and 30mpg on the new one and drive 15,000 miles a year. 15 mpg car uses 1000 gallons of fuel for the year. 30 mpg car will use 500 gallons of fuel for the year.. This cash for clunkers sounds good until you crunch the numbers, then it shows just how wasteful it is and doesnt do anything except make people broker than they were and destroy in most cases perfectly serviceable used vehicles.


Anonymous August 6, 2009 at 4:49 pm

I hope you understand that SPENDING money helps the economy and the cash for clunkers program has moved a lot of vehicle inventory. Also, though you count the value of the car in the calculation, the government probably on looks at production costs. No one cares that the owner of the car is losing money, however the saved gas will spare the environment as well as keep American moneys flowing into an industry other than oil (which has a pretty standard Return on Investment that could be beat by many other industries).

Now, if having less money puts you into financial hardship that has a negative impact on your life and thus (in some part) on the country… well then lets hope not too many people get a car just because of this “good deal.” So yeah, you’re correct in that this is not a perfect deal for consumers. However it is a good deal for the economy and the government. Not to mention all the car dealers that are REQUIRED to liquidate their inventory anyway (or did this change? last I heard corporately owned car dealers had to liquidate ASAP).


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