"Cash for Clunkers" kicks off today, July 24th. Although nicknamed "Cash for Clunkers," it is officially named the Car Allowance Rebate System (CARS, no!). While billed more as an environmental program, it's also hoped it will be prove to be a stimulus for car dealers.
The official website for "Cash for Clunkers" is at http://www.cars.gov/. While the program kicks off today, the site itself says rebates won't start until July 27th, which would be Monday. Still, car dealers have said they are seeing more interest, and hope for an immediate stimulus to sales.
How does "Cash for Clunkers" work for you, the consumer? Is it going to be a stimulus for you, someone hanging on to an older, less-green automobile, to upgrade? One thing to remember, if you are willing to shop Chrysler vehicles: to "celebrate" the event, Chrysler is offering a matching rebate to customers, doubling the rebate.
It should be remembered that "Cash for Clunkers" requires you to buy (or lease) a new car. You cannot buy a used car and still get the rebate, and that should be remembered, since depreciation, as I hope you know, is highest at the beginning of a car's life. That already is a "sort of" rebate. Still, many want new cars, and only new cars.
Now the big question: how much do you save and how does it work? From the official "Cash for Clunkers" website, here are the details:
The "Cash for Clunkers" trade-in must be less than 25 years in age.
Generally, trade-in vehicles must get 18 or less MPG.
"Cash for Clunkers" New Passenger Car Rebate Details: The value of the credit for the purchase or lease of a new passenger car depends upon the difference between the combined fuel economy of the vehicle that is traded in and that of the new vehicle that is purchased or leased. 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.
"Cash for Clunkers" New Truck, Van, or SUV Rebate Details: The value of the credit given for the purchase or lease of a category 1 or 2 truck also generally depends on the difference between the combined fuel economy of the vehicle that is traded in and that of the new vehicle that is purchased or leased. If the new vehicle is a category 1 truck that has a combined fuel economy value that is at least 2, but less than 5, miles per gallon higher than the traded-in vehicle, the credit is $3,500. If the new category 1 truck has a combined fuel economy value that is at least 5 miles per gallon higher than the traded-in vehicle, the credit is $4,500.
If both the new vehicle and the traded-in vehicle are category 2 trucks and the combined fuel economy value of the new vehicle is at least 1, but less than 2, miles per gallon higher than the combined fuel economy value of the traded in vehicle, the credit is $3,500.
If both the new vehicle and the traded-in vehicle are category 2 trucks and the combined fuel economy of the new vehicle is at least 2 miles per gallon higher than that of the traded-in vehicle, the credit is $4,500.
A $3,500 credit applies to the purchase or lease of a category 2 truck if the trade-in vehicle is a category 3 (work) truck that was manufactured not later than model year 2001, but not earlier than 25 years before the date of the trade in.
"Cash for Clunkers" New Work Trucks Rebate Details: A work truck, which is called a category 3 truck under the CARS Act, is subject to special rules. Work trucks are not rated for fuel economy by the EPA. Thus, the eligibility of work trucks for the program does not depend on combined fuel economy. Instead, work trucks may only be traded in under the program if they were manufactured not later than model year 2001 and not earlier than 25 years before the date of the trade in. In addition, work trucks may only be traded in for the purchase of a category 2 truck or another category 3 truck that is of similar size or smaller than the traded-in vehicle. Finally, the Act provides only for a $3,500 credit for trading in a work truck.
The CARS Act limits the amount of funds that can be used to provide credits for purchases or leases of work trucks. Only 7.5 percent of the funds appropriated for the program may be used for credits for work trucks. Once that limit is reached, NHTSA will stop making payments for these transactions. NHTSA will keep the public informed as to the funds that remain available for these credits.
"Cash for Clunkers" rebates will not be taxable as income, so don't worry about it acting as a negative stimulus to your wallet, of any type.
Further, dealers cannot further create a "Cash for Clunkers" stimulus to their bank account by charging you a fee for the program.
More questions? Go to the "Cash for Clunkers" official website linked above.
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