On Weds June 24th President Obama signed the much debated “Cash for Clunkers” bill which in summary allows a buyer to trade-in his/her old gas-guzzler for a new more fuel efficient ride and get up to $4,500 in a voucher toward the purchase price of this new vehicle. The program will now be known as Car Allowance Rebate System (CARS). There was opposition on all sides to this bill. The environmentalist Used car buyer felt the bill did not go far enough to improve fuel economy.
They pointed to the fact that one of the new vehicles that qualified was the Hummer 3. The automotive industry supporters feel that more that than the $1 billion that has been allocated is needed to jump start the car sales. This amount would allow approximately 250,000 consumers to participate in the program. Note, the original Cash for Clunkers bill had a $4 billion price tag. And of course, there are many who feel we have spent enough of the tax payers money to bail out the automotive industry. About $60 billion has been allocated so far, what is another billion.
OK, it is now time to move on and stop the “Why this program will not work and is a waste, etc”. This program can do some good. How many things have come of out Washington lately that will actually stimulate consumer spending? In all the bailout money what can we really point to that has helped we understand. The Cash for Clunkers program will stimulate car buying and has shown to do this in Europe, proving to be very successful. The American people can understand this program and will get factual results on how it is doing. American’s understand car sells numbers.
As a summary, the basic rules for Cash for Clunkers are:
o Your vehicle must be less than 25 years old on the trade-in date.
o Generally, trade-in vehicles must get 18 or less MPG (some very large pick-up trucks and cargo vans have different requirements, that is trucks classified as non-passenger vehicles).
o Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in date. The dealer must monitor this closely.
o Trade-in vehicle must be drivable. I would say this might be up for interpretation.
o Owners who purchase a new passenger car that gets at least 4 mpg higher than their old “clunker” get a $3,500 voucher. If the mileage difference is more than 10 mpg, the consumer gets the full $4,500.
o Buyers of small trucks and SUVs need less of an improvement to get the same amounts. If the new vehicle gets at least 2 mpg more than the “clunker,” a $3,500 voucher is issued; for new trucks or SUV’s getting 5 mpg, the new car owner gets $4,500.
o Money can only go towards purchase or lease of new vehicles that qualify. Used cars need not ably.
o Qualifying lease means a lease of an automobile of not less than 5 years.
o The fuel efficient automobile must have a MSRP of $45,000 or less.
o You don’t need a voucher, dealers will apply a credit at purchase and will get their money from the government.
o Program to run from July 24 to November 1, 2009 or when the funds run out whichever is sooner.
The National Highway Traffic Safety Administration (NHTSA) is responsible for formulating the final rules and how to administrate the program with the dealers. They have 30 days to get this done and roll-out the program with the roll-out date being July 24, 2009
Why do I make the statement buyer beware? Of course in every new program there are the scammers and opportunist who are just waiting to take advantage of the uninformed. There currently are websites offering to pre-register you for the CARS program and register you with local dealers. As a buyer you do not need to pre-register with anyone. I repeat do not pre-register, do not give out your personal information, especially your social security number.