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Cash for Clunkers

ALERT!!! The Cash for Clunkers Program administered by the US Government ended in 2009 and it is unlikely it will be restarted anytime in the near future. You can receive a great price on your used car by completing the Request a Free Quote on the right side of the screen. Or alternatively if you have a clunker you can donate it to charity.



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...we're working with Congress on Fleet Modernization legislation that can provide a credit to consumers who turn in old cars and purchase cleaner more fuel efficient cars. - President Obama, March 30, 2009


What is Cash for Clunkers?

Cash for Clunkers is the term used to describe recently passed legislation which will allow consumers to receive up to $4,500 off the price of a new vehicle in exchange for disposing of/trading in a registered motor vehicle meeting certain criteria.

What is the objective of Cash-for-Clunkers?

Congress hopes to boost automobile sales and give the automobile industry a much needed shot in the arm. In addition, with lower mileage vehicles being replaced by higher mileage vehicles the environment should benefit from less auto emissions.

Where does Cash for Clunkers legislation stand?

President Obama signed the so called "Cash-for-Clunkers" bill on June 24th. Similar to successful programs in Europe, the legislation also called "cash-for-guzzlers" and "fleet modernization", would provide up to $4,500 off the price of a new car for people who trade in vehicles for new ones that get better mileage. The bill, which is part of the $106 billion wartime spending bill, includes $1 billion for the "cash for clunkers" program. The National Highway Traffic Safety Administration announced the final rules for the program on July 24th. On August 6th Congress added an additional $2 billion in funding for the program. The NHTSA has set up a website, www.cars.gov.

How will the Cash for Clunkers program work?

The legislation states that running and driving cars less than 25 years old which have been registered and insured for at least one consecutive year, that have a gas mileage rating of 18 miles per gallon (MPG) or less, would be eligible to be traded in towards the purchase or lease of a brand new foreign or domestic car. To be eligible leases must be for 5 years or more. In New Hampshire and Wisconsin, which have no State Laws requiring automobile insurance the requirement that the trade in be insured for 1 consecutive year prior to the trade is waived. The trade in may not be used toward the purchase of a vehicle with a manufactured suggested retail price over $45,000. If the new vehicle is rated at least 4 MPG better than the old vehicle, the discount is $3,500. If the new vehicle is rated at least 10 mpg better than the old one, the discount is $4,500. Click button below to view the Cash for Clunkers, Committee on Energy and Commerce Fact Sheet.

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What about trucks?

It's a bit more complicated for trucks. For most Sport Utility Vehicles (SUVs), vans and pick-ups, the old one must be rated at 18 mpg or less. If the new truck gets at least 2 mpg better that the old one, the discount is worth $3,500. If it gets at least 5 mpg or better, it's $4,500.

For heavy duty (6000 to 8500 pounds gross vehicle weight) the old truck must be rated 15 mpg or less. The new one must be rated at least 1 mpg better for $3,500 or 2 mpg for $4,500.

Work trucks (8500 to 10000 pounds) don't have a mpg rating, so the only criteria are they must be 2001 or older. Only a $3,500 discount is available.

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Is it worth it for $3,500 or $4,500?

This will depend on your vehicle and financial situation. If the vehicle is worth significantly less than the discount amount and you can afford and want a new car, then it's worth it. It also depends on the savings from driving a more fuel efficient car. The easiest way to calculate fuel savings is to calculate the gas used to drive a 100 miles. For example if your current vehicle gets 17 mpg and the one you want to buy gets 25 mpg. Then your current car uses 5.88 gallons to go 100 miles and the new one will use 4 gallons. At $2.50/gal. you would save $4.70 per 100 miles driven. If you drive 20,000 miles per year you would save $940 per year with the new car. Also, every 1 gallon saved reduces CO2 emissions by 20lbs so a reduction of 1 gallon per hundred miles saves 1 ton of cO2 emissions per 10,000 miles driven. For the example given 376 gallons of gas would be saved and 7,520 of CO2 would not be emitted into the atmosphere. You can learn more about fuel economy at the U.S. Department of Energy Fuel Economy Website.

How do I find out if my clunker meets the Miles Per Gallon(MPG) Requirement?

Go to the U.S. Department of Energy Fuel Economy Website

What can I do with my Clunker if I can't use it to get a discount?

If you have an old car that's not eligible for the program or your financial situation doesn't allow you to purchase a new car, but the gas and repair costs tell you its time to get rid of your clunker, then you can sell your vehicle or donate your car to charity.

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Can a car trade in be used to purchase a truck and vice versa?

Based on information published by the National Highway Traffic Safety Administration the answer is yes as long as it meets the mileage improvement critiria. For example if you trade in a truck which has a combined mileage rating of 15mpg you can use the voucher for a car. The minimum mileage requirement for a car is 22 mpg. So if the new car you buy has a combined rating of 22-24 mpg gallon the voucher is worth $3,500. If the new car mileage rating is 25 mpg or more the discount is worth $4,500. A reverse example is if you trade in a car which has a combined mileage rating of 18mpg for a new truck then the discount is $3,500 for trucks which get 20-22 mpg and $4,500 for trucks which get 23 mpg or greater.

What happens to the vehicles which are traded in under the Cash for Clunkers Program?

The vehicles are supposed to be salvaged with the engine, transmission and some other parts destroyed so they cannot pollute again. Other parts can be resold, however.

If I'm in the market for a new car but don't have a car eligible for a voucher, can I buy one or use someone else's?

The House bill stipulates that the clunker must have been insured and registered to the owner for 1 consecutive year to be eligible. No other person except the owner can use the trade in under this program. Also only vehicles less than 25 years old are eligible.

How can I find a dealer who will accept my clunker?

The program started on July 1, 2009 and most new car dealers have signed up to participate in the program. So go ahead and request a quote from a dealer who has signed up for the Cash for Clunkers Program. Enter your information in the Request a Quote box on the upper right side of this page.

How soon will this become law and will it be retroactive?

Cash for Clunkers, called Car Allowance Rebate System(Cars) is now law and became effective on July 1, 2009, the program will end on November 1, 2009 or when the $3 billion alloted for the program runs out, whichever comes first. The initial $1 billion allotted ran out in early August. Congress has approved another $2 billion in funding to keep the program going. On August 19, 2009 the NHTSA announced that the Cash for Clunkers Program will end on Monday, August 24th, 2009 at 8PM EDT. Bookmark this site and sign up for the newsletter to stay informed as this program progresses.

Will the program be continued?

At this time it looks unlikely that the program will continue beyond August 24, 2009.

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