Cash for Clunkers Program passed by the Senate today, which gives consumers with cars that get less than 18 miles per gallon the ability to turn them in for a $3,500 or $4,500 cash voucher. The Cash for Clunkers Program was nearly defeated by Republicans, but Democratic support saved the day in part due to Obama’s lobbying of the program. The President still needs to sign the bill into law.
What is Cash for Clunkers?
Cash for Clunkers, also referred to as Cash for Guzzlers or (H.R. 2751) is a measure to encourage consumers who own and operate a car that gets under 18 miles a gallon to trade the car in for a more fuel efficient model.
The bill proposes that consumers will be rewarded if the new car they purchase is rated at or above 22 miles per gallon. (average city/hwy). The measure has cleared two important votes and will head to Congress for a vote in the coming days.
There are two cash vouchers that can be issued when a consumer purchases a new, not used, car from a dealer. If the new car gets 4 miles per gallon more than their current car, a consumer would get a cash voucher for $3,500.
If the increase is 10 miles per gallon, they could get a $4,500 cash voucher. Cars that have a trade in value greater than $4,500 would not be used for this program since all cars traded will be sent to the scrapyard.
A list of common questions and answers has been compiled for the Cash for Clunkers program. Among the most popular questions, here are some quick tips:
- The bill language is not yet finalized so specific operational details are not known. That includes start date, end date, and conditions about current vs. book estimated MPG.
- The bill speaks to purchasing ONLY new cars from a dealer that will take in your clunker as part of a new car transaction.
- Car or trucks can be traded in for a new car or a new trucks. Trucks can be traded in for a new car.
- If you recently purchased a new car and want to know if the voucher is retroactive, the answer is most likely NO.
This is because you most likely do not have the paperwork to show you traded in a clunker and that the car went to the scrapyard. You can research miles per gallon in cars you’re interested in by doing side-by-side comparisons at www.fueleconomy.gov. Choose a few comparable models that have characteristics you’re looking for, and don’t forget to find out what financing options are available to you.
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