Cash For Clunkers Questions & Answers
Helpful Q&As for Consumers
These answers are based on the provisions of the Consumer Assistance to Recycle and Save Act of 2009.
What is the Car Allowance Rebate System?
The Car Allowance Rebate System is a new program from the government that will help you pay for a new, more fuel efficient car or truck from a participating dealer when you trade in a less fuel efficient car or truck.
What is NHTSA doing to implement the program?
As required under the law, NHTSA will publish rules for the program in 30 days. We are currently working closely with manufacturers, dealers, and disposal facilities to get a workable, effective program up and running.
Do I need to get a voucher or sign up for this program?
No. You do not need a voucher and you are not required to sign up or enroll in this program. Participating new car dealers will apply a credit, reducing the price you pay at the time of your purchase or lease, provided the vehicle you buy or lease and the vehicle you trade in meet the program requirements. The dealer will then obtain reimbursement from the government.
How do I know if a dealer is participating in the program?
The law requires dealers to be registered to participate in the program. We are moving as quickly as possible to register interested dealers. As dealers are registered, we will list them on this website. We will continue to update this list during the life of the program. Meanwhile, you may wish to contact dealers in your area to ask whether they plan to participate in the program.
How do I know if my car or truck is an eligible trade-in vehicle?
There are several requirements (but you also have to meet certain conditions for the car or truck you wish to buy). Your dealer can help you determine whether you have an eligible trade in vehicle.
Your trade-in vehicle must
- have been manufactured less than 25 years before the date you trade it in
- have a “new” combined city/highway fuel economy of 18 miles per gallon or less
- be in drivable condition
- be continuously insured and registered to the same owner for the full year preceding the trade-in
Note that work trucks (i.e., very large pickup trucks and cargo vans) have different requirements.
How do I find out when my vehicle was manufactured?
The month and year of manufacture (e.g., 1-96 (January 1996)) appear on the safety standard certification label that is located on the frame or edge of the driver’s door in most vehicles.
How do I find out the combined city/highway fuel economy rating of my trade-in vehicle?
Visit our MPG Calculator and click on the model year of your vehicle, the make, and then the model. Under the words “ESTIMATED NEW EPA MPG” in the red banner, there is a red number with the word “COMBINED” under it. That is the new combined city/highway fuel economy for your vehicle. You may then enter the make, model, and model year of a new vehicle you may want to buy and see its combined MPG for comparison.
Does the program apply if I want to lease a vehicle, or must I purchase a vehicle?
Under the program, you may purchase a new vehicle or lease a new vehicle, provided the lease period for the new vehicle is at least five years.
Is there a cap on the price of the vehicle I can buy or lease under the program?
Yes. The manufacturer’s suggested retail price cannot exceed $45,000.
Does the program apply if I want to buy a used car?
No. The program does not apply to the purchase of used vehicles.
What is the amount of the credit?
The amount of the credit is $3,500 or $4,500, and generally depends on the type of vehicle you purchase and the difference in fuel economy between the purchased vehicle and the trade-in vehicle. Different requirements apply for work trucks.
In addition to the credit, will I get the full value of my trade-in vehicle?
No. The law requires your trade-in vehicle to be destroyed. Therefore, the value you negotiate with the dealer for your trade-in vehicle is not likely to exceed its scrap value. The law requires the dealer to disclose to you an estimate of the scrap value of your trade-in vehicle.
I don’t drive an American car but I would like to trade in my old car for a newer, more fuel efficient one. Is this program only for American cars?
No. You may trade in or buy a domestic or a foreign vehicle.
I have a truck and I cannot find its fuel economy rating. Is it an eligible trade-in vehicle?
Maybe. Some trucks, such as work trucks, were never rated for fuel economy. For these trucks, age is the only criterion for determining whether they are eligible trade-in vehicles. If you have one of these trucks, it must be from model year 2001 or earlier, but also the date of manufacture must be less than 25 years from the date you trade it in, to be an eligible trade-in vehicle. Other restrictions may also apply.
I just traded in my old car for a new vehicle last month. Will I get some money back?
No. The program does not apply retroactively.
The following FAQ was created by Edmunds.com
How much are the vouchers worth? This will depend on the car you are turning in and the type of car you buy. In general, if the improvement in fuel economy between your old car and the car you buy is 10 mpg (combined highway mileage according to the EPA), the maximum credit will be $4,500. The requirement for improvement in fuel economy for trucks is lower. For specifics, see the above chart.
How old does my car need to be? Eligible vehicles must be manufactured in model year 1984 or later. For work trucks however, any model built before 2002 is eligible. We anticipate that most cars traded in will likely be model-year 2000 and older.
What types of vehicles qualify? In general, this bill aims to take polluting gas-guzzlers off the road. The vehicle must have a federal combined city/highway fuel economy of 18 or less miles per gallon. This means that many American-made cars and trucks will be eligible for vouchers toward the purchase of new vehicles. The categories of vehicles that will qualify fall into four classes: passenger cars, light-duty trucks, large light-duty trucks (6,000-8,500 pounds) and work trucks (8,500-10,000 pounds).
What kind of mpg will the new vehicle need to get? Different levels of improvement are required for each type of vehicle. In passenger cars, if mileage is improved by 10 mpg, the $4,500 voucher is awarded; if fuel economy is improved by only 4 mpg, the $3,500 voucher is awarded. The mileage improvement levels and voucher amounts for the different classes of trucks are listed in the chart above.
The proposal mentions a one-year time limit. Is there a cap on the number of vehicles? The bill is written to provide vouchers for 1 million purchases. Since there is a one-year limit, consumers who are interested in taking advantage of this program should track the progress of the bill and apply for a voucher as soon as funds become available. There is a special provision in the bill that requires that no more than 7.5 percent of the funds for the program shall be used for work trucks.
How long do I need to have owned the vehicle I’m trading in? The vehicle must be insured and registered in your name and in use for at least one year.
If I have an older car that is in good running condition, or a classic car, is it mandatory for me to turn it in? No. This program is completely voluntary.
What happens to the car that you trade in? The dealer is responsible for sending the vehicle to a disposal facility. The entire vehicle will be crushed or shredded so that the car does not end up on the road again.
How will this affect used-car values? Since the “clunkers” will be taken off the road, there will be fewer older vehicles in the marketplace. However, our analysts don’t expect this program to drastically affect used-car values.
Where do I find the mpg numbers to see if my vehicle qualifies for the Cash for Clunkers vouchers? The EPA’s combined mileage will be used. This is a combination of the highway and city mileage for vehicles. Models prior to 2008 will use the converted MPG numbers which take into account the new EPA testing methods. This information can be found on the window sticker of the car or at fueleconomy.gov.
What kind of vehicles qualify as light-duty and large light-duty trucks? Trucks qualify based on class and vehicle weight. For example, the Ford F-150 would be considered a light-duty truck. If you are considering taking advantage of this program, look up your vehicle on Edmunds.com and determine its weight. If it is between 6,000 and 8,500 pounds and gets less than 15 mpg, you have a large light-duty truck and will need to buy a truck that improves your fuel economy by 1 mpg for a $3,500 voucher. If you select a truck that improves fuel economy by at least 2 mpg, you will qualify for the $4,500 voucher. A work truck is classified as being between 8,500 and 10,000 pounds. The only requirement for this class is that the trade-in vehicle needs to have been built before model-year 2002.
When is the program expected to go into effect, and will it be retroactive? Passage of this bill could come before the end of July and the vouchers would be available shortly thereafter. It will not be retroactive to any vehicle purchase made before the bill is passed. The current House legislation was folded into a broader energy package and was passed on June 9, 2009. Now it will go to the Senate, where it undoubtedly will go through further changes.
Where will the money for vouchers come from? Since President Obama wants this to move as quickly as possible, it is likely that the money will come from the already approved Troubled Asset Relief Program (TARP) funds and the economic stimulus package.
Does the voucher augment or replace what the dealer would give me for my trade-in? The money you receive from the Cash for Clunkers program will act as your trade in value. It cannot be combined with the dealer’s trade in offer. This program is primarily designed to inflate the value of older vehicles worth less than $4,500.
Is there a limit on the price of the vehicle purchased with Cash for Clunkers vouchers? Vehicles purchased with the vouchers must have an MSRP of $45,000 or less.
How will the program be tracked? Via dealers or the DMV? Little information has been made available on this aspect of the bill. It is likely, though, that the Vehicle Identification Number (VIN) will be the prime tool in verifying information on the trade-in vehicle such as model year, engine size and the corresponding EPA-rated fuel-economy levels. The government has numerous databases with information on cars that are tracked through their VIN.
How will you get the money toward the trade-in? An electronic transfer from the government to the dealer will be issued once a vehicle is determined to be qualified for the Cash for Clunkers program. The voucher amount would be credited as all or part of the down payment on a qualifying new car.
Will it apply to used-car purchases? The final details of the bill are not yet available. However, it has always been assumed that the vouchers will only apply to new car purchases.
What if you’re leasing a vehicle and wish to trade it in? Again, final details are not available. But it is unlikely that consumers who are currently leasing vehicles will qualify for this program.
What if you wish to lease the new vehicle? In this case, it appears likely that the voucher could be applied to a leased vehicle as a “capitalized cost adjustment.” This would lower the price of the vehicle and thus reduce the monthly payment of a lease. In order for a lease to qualify, the term must be for no less than five years. However, we don’t recommend getting into a five-year lease because of the additional costs.
I hear there is another version of the bill, how does this version differ? Senate Bill S. 1200, sponsored by Senator Dianne Feinstein, is a more environmentally focused alternative to the House version. The Senate version has a staggered voucher structure that increases the voucher’s value based on the mpg improvement. The Senate bill also lowers the mpg requirement for cars and trucks, but raises the mpg limit on the new vehicle.
Sources: www.Edmunds.com – www.cars.gov