Aug 26 2009
Cash for Clunkers - What You Need to Know About the CARS Act
You’ve probably already heard about the C.A.R.S (Car Allowance Rebate System) Act, otherwise known as the Cash for Clunkers program. Pursuant to the act, the government will give a used car owner a credit of $3500-$4500 toward the purchase of a new car when the old clunker is traded in at an automobile dealer. The system encourages individuals to get rid of their old cars in favor of more fuel-efficient vehicles.
There are a few requirements that must be met in order to be eligible for a rebate on your trade in. The basic rules of the Cash for Clunkers program are as follows:
• The vehicle being turned in must be less than 25 years old on the trade-in date.
• The trade-in vehicle must get 18 miles per gallon or less according to revised EPA standards.
• The trade-in vehicle must be drivable.
• The fuel efficient automobile must have a MSRP of $45,000 or less.
• Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in date.
• Rebate money can only be applied to the purchase or lease of new vehicles that qualify. The money cannot be applied to used vehicles.
• A qualifying lease means a lease of an automobile of not less than 5 years.
• Car rebates must be $3500 if the new car gets at least 4 mpg more than the trade-in, or $4500 rebate if the car gets at least 10 mpg or more than trade-in.
• For SUV’s, pick-ups, or minivans, a rebate of $3500 will be given if the new vehicle gets at least 2 mpg more than the trade-in, or $4500 if it gets at least 5 mpg more than the trade-in.
Participating in the program is very simple. All the customer needs to do is bring the required information to a local dealer. The dealer then prepares the necessary paperwork and submits it to the appropriate agency. The National Highway Traffic Safety Administration makes sure that all requirements have been properly met and sends a finance credit voucher to the dealership.
However, consumers should be aware that there are scammers who will try to take advantage of uninformed consumers. There are websites offering pre-registration for the CARS program and offer to register the consumer with local dealers. Buyers should be aware that they don’t need any pre-registration.
Another type of fraud perpetrated by car dealers through the Cash for Clunkers program is charging the consumer a specific fee (usually $250) for administering the CARS program. Please remember that the dealer cannot charge you this fee when you purchase or lease a new vehicle.
The CARS program can be a great opportunity for you, the car dealer, and the economy if you know the rules.
