The New Cash For Clunkers Programs

Looking to turn that old car into a new one? Uncle Sam might help.
By Zach Bowman
Last month, President Barack Obama signed a new federal automotive incentive program into law. Cash for Clunkers, as the legislation has come to be known, provides up to $4,500 toward the purchase of a new, fuel-efficient car or truck so long as an older, less-efficient vehicle is turned in at the time of purchase. Of course, it’s not quite that simple. As with most federal programs, there are stipulations, regulations and computations to go through before you can figure out whether the gas hog in your driveway could translate into cash in your pocket. Fortunately, DriverSide is here to help.
Cash for Clunkers Program Summary
Cash for Clunkers Program

The Cash for Clunkers program didn’t have an easy path to ratification. Interest groups from classic car collectors to green advocacies had a thing or two to say about the bill (multiple bills, actually) while it was swirling around congress. By the time it showed up on the president’s desk, it was attached to a larger defense spending bill, prompting some groups to say the bill lacked the green teeth it needed to stand on its own. Either way it’s a law now, and the National Highway Transportation Safety Administration is responsible for regulating the program. 
While the program started off with $1 billion in funding and a run-time from July 2009 to November 2009, massive public interest saw nearly all of the allocated funds dry up in the first week. Since then, Congress passed a last-minute $2 billion extension to keep the CARS wheels turning. With the extra cash to help it along, Cash for Clunkers should continue on until Labor Day. So what does it take to trade your clunker in for cash from Uncle Sam? That all depends on the vehicle’s year and EPA rating.

Which Cars Are Eligible?
A standard passenger car must be a 1984 model or newer, and the new replacement vehicle must get at least 22 mpg combined. If the new purchase gets at least 4 mpg more than the old car or truck, buyers will receive a $3,500 voucher toward purchase. A 10 mpg will nab you a $4,500 voucher.
Larger vehicles like SUVs, minivans and small pickup trucks have slightly different criteria. Just like passenger cars, the old trade-in must be a 1984 model or newer, but the replacement must only get at least 18 mpg to qualify. Buys that mark a 2 mpg improvement over the trade-in qualify for the $3,500 voucher, while reaching for a 5 mpg improvement will net you the larger $4,500 pay-out.
The fuel economy standards get even more lax for light-duty pickup trucks and vans. Again, the same 1984 or newer stipulation stands for the trade-in vehicle, but new purchases are only required to get 15 mpg or better. A 1 mpg improvement over your clunker is good for the $3,500 voucher, and a 2 mpg jump scores the $4,500 voucher. Work trucks require no jump in fuel economy to take home the $3,500 credit.
Finally, there are work trucks between 8,500 and 10,000 lbs. Unlike the rest of the eligible vehicles, these work horses must be 2001 models or older, and there’s no minimum fuel economy requirement for their replacements. The law simply states they must be of similar size or smaller. The downside is that they are only eligible for a $3,500 credit.

How Does It All Work?
Now that we’ve got a grasp on what vehicles are eligible for which vouchers, we can take a look at how the process works. Say you bring in a car that meets the all of the criteria, and you’ve found a suitable replacement. Ready to roll in some green? Not so fast. First, you must have owned your vehicle for at least one year, complete with insurance and registration records to back up your claim. Second, the trade-in vehicle must be yours. That means you can’t turn over granny’s LTD in hopes of hopping into a new car.
If you’ve cleared all of those hurdles, the dealer will take your registration, title and keys, and deduct the value of your voucher from the overall cost of your new vehicle. That means you never actually see a check for whatever amount you qualify for. Instead, the credit is applied directly to your purchase. Your old vehicle then gets hauled off to the scrap yard, where useable parts are removed and the rest is recycled or crushed for scrap.

When Can I Trade My Vehicle In?
Ready to head on down to the dealer to get started? Unfortunately, the NHTSA has one month from the time the bill was ratified into law to set up the program. That means we can’t take advantage of the vouchers until July 25 at the latest. In the meantime, you can head over to the NHTSA’s official Cash for Clunkers Web site,, and sign up for email updates. You can also cruise over to to research your vehicle’s combined EPA rating. Local dealers who plan to participate in the program are also likely to help you decide on which new models will be eligible for the program, so it doesn’t hurt to do your homework now.
The Cash for Clunkers program isn’t going to be able to help everyone jump into a brand new car, but for those eligible, it should do much to help lower monthly payments. If you’ve been holding off on a new purchase because you think you can’t afford it and happen to have a vehicle that qualifies for the new incentives, you may just be able to afford a new, fuel-efficient ride.

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