CARS, Cash for Clunkers

CARS, the CAR Allowance Rebate System, began as a $1 billion government program to help consumers buy or lease a more environmentally-friendly vehicle from participating dealers. By trading in a less fuel-efficient car or truck, the consumer would receive a $3,500 or $4,500 voucher towards the purchase of an environmentally-friendly vehicle.

With the liquidation of the first $1 billion invested into the program, the House of Representatives voted another $2 billion in “Cash for Clunkers” vouchers.

Do I qualify for the “Cash for Clunkers” Program?

Qualified consumers may participate in the CARS Program between July 1, 2009 and November 1, 2009, or when authorized funds are no longer available. Qualified consumers are defined as consumers with an eligible vehicle that go to a participating dealership to purchase or lease a new vehicle that has a combined fuel economy value of: 22 miles per gallon for passenger automobiles; 18 miles per gallon for category 1 trucks; and 15 miles per gallon for category 2 trucks.

Vehicles being forfeited are eligible if they meet all of the following criteria:

• Manufactured less than 25 years before the date you trade it in
• Has a “new” combined city/highway fuel economy of 18 miles per gallon or less; you may find out your “new” combined fuel economy mileage at the CARS vehicle eligibility guide
• Be in drivable condition
• Be continuously insured and registered to the same owner for a minimum of one year preceding the trade-in or forfeit; this prevents the purchase of an older vehicle simply to use it for the “Cash for Clunkers” voucher

How are the different categories of vehicles defined?

The term “passenger automobile” applies to all cars that are (1) manufactured primarily for transporting persons and (2) are capable of off-highway operation. Vehicles not manufactured primarily for transportation include pickup trucks and certain vehicles that permit expanded use of the vehicle for cargo-carrying functions. Passenger automobiles are also referred to as passenger cars.

Category 1 trucks are nonpassenger automobiles. They include sport utility vehicles (SUVs), small and medium pickup trucks and small and medium passenger and cargo vans.

Category 2 trucks are large vans or large pickup trucks. This is determined by the length of the wheelbase (more than 115 inches for pickup trucks and more than 124 inches for vans). Some of these vehicles exceed this threshold and are considered Category 3 trucks.

Category 3 trucks are work trucks that are between 8,500 and 10,000 pounds. Very large pickup trucks (with cargo beds 72 inches or more in length) and very large cargo vans fall into this category.
Will I receive $3,500 or $4,500?

In order to determine whether your vehicle is eligible for a $3,500 or $4,500 rebate, determine your vehicle’s combined fuel economy mileage. Look up the combined fuel economy mileage of your desired new vehicle.

If the new vehicle has a combined fuel economy that is at least 4, but less than 10, miles per gallon higher than the traded-in vehicle, the credit is $3,500. If the new vehicle has a combined fuel economy value that is at least 10 miles per gallon higher than the traded-in vehicle, the credit is $4,500. Dealers have the right to deduct $50 from this voucher for processing purposes.

What happens to my old vehicle?

Vehicles that are forfeited for the $3,500 or $4,500 voucher are scrapped. The vehicle will be crushed or shredded. This is to protect the environment from future pollution and ensure the environmentally-friendly vehicle is replacing the inferior “clunker.” The vehicle will not be resold as a used car.

Will I get any other monetary compensation during my purchase?

The vehicle is not eligible for its trade-in value, although dealers must still provide consumers with any hybrid tax write-off.

May I apply multiple “Cash for Clunkers” towards the purchase of one vehicle?

No. The CARS Act only allows one credit (trade-in or forfeit) to be applied toward the purchase or lease of any single vehicle. You may use “Cash for Clunkers” to buy or lease a domestic or foreign vehicle.