Cash for Clunkers

The Cash for Clunkers Blog is an info blog to keep you updated on the current Cash for Clunkers legislation in the US House (H.R. 2751) and in the US Senate (S.1200).

The Consumer Assistance to Recycle and Save Act, or HR 2751, is a one-year, $4 billion program aimed at helping people secure more fuel-efficient vehicles. Under the bill, consumers could receive up to $4,500 to trade in their gas-guzzlers for new vehicles.

The measure is aimed at helping the ailing auto industry and ridding the streets of vehicles that are not fuel-efficient.

Old cars traded in will not be resold; they will be crushed.

Car owners could receive a $3,500 electronic voucher if they trade a vehicle getting 18 mpg or less for one getting at least 22 mpg. That value could increase to $4,500 if the new car’s mileage is 10 mpg higher than that of the old vehicle.

Owners of SUVs, pickups or minivans could receive $3,500 if they trade in a vehicle that gets 18 mpg or less for a new truck or SUV that gets at least 2 mpg higher than the old vehicle. Their voucher increases to $4,500 if the new truck or SUV gets at least 5 mpg higher than the old vehicle.

Vehicles that are 1984 or newer, in drivable condition and continuously insured to the same owner for at least one year immediately before trade-in qualify for the program. This is to ensure the vehicles in this program are actually coming off the road rather than have just been setting on cinder blocks. The program would not make fiscal sense for people whose car values exceed the voucher prices.

Cars that have not been insured for the past year or those that are older than 25 years are not eligible to be traded in for vouchers.

Only one voucher per person is allowed.

Dealers would register to participate in the program. Registered dealers would apply the vouchers to the down payment for the purchase of a qualifying automobile. The federal government would then make an electronic payment to the dealers.

Again a slight hitch is included in the bill, the vehicle that you trade in must go to the scrap yard. So you will get no cash for the vehicle you trade-in. This will effectively reduce the value of the subsidy for most people as the vehicle they trade in likely has some value.