Reuters reported that the Cash for Clunkers legislation has passed the United States Senate on the coattails of a war spending bill and is next headed for the desk of President Obama. Once signed into law, Cash for Clunkers will provide incentives for certain car owners to trade in older, less efficient vehicles for new ones.
To qualify for a Cash for Clunkers payment, a car owner must trade a vehicle whose average fuel economy is 18 m.p.g. or less. In return, the car owner will receive a voucher toward $3500 to $4500 off the price of a new automobile.
The vouchers are intended to stimulate the sales of new automobiles in the dormant domestic auto industry. The Cash for Clunkers program has been widely mis-described as an environmental bill designed to get older cars off the road. The cost to U.S. taxpayers for Cash for Clunkers is expected to reach $4 billion and will be funded through the previously legislated $787 billion economic stimulus plan.
While the bill is hailed by the auto industry, critics call it a “handout for Hummers” due to its weak environmental requirements.
Who Will Operate Cash for Clunkers?
The Cash for Clunkers program will operate under the auspices of the U.S. Department of Transportation. Transportation has thirty days from the law’s signing to put the Cash for Clunkers program into operation.
How Do I Know If My Car Is a Bona Fide Clunker?
Not all clunkers qualify for the Cash for Clunkers program. To be eligible, a prospective clunker trade in must be driveable, continuously insured by the same owner for a year or more immediately preceding the trade in, be manufactured in 1984 or later and have a combined fuel economy rating of 18 m.p.g. or less according to www.fueleconomy.gov.
How Do I Qualify for the Maximum Cash for Clunkers Credit?
The amount of the Cash for Clunkers credit varies according to the difference between the clunker’s fuel economy rating and the new vehicle’s fuel economy rating. To obtain the maximum voucher, a new car’s combined fuel economy rating must exceed that of the clunker by 10 m.p.g. or more while a new pick up’s rating must be 15 m.p.g. or more.
How Is the Cash for Clunkers Payment Handled?
The government transfers money electronically to the auto dealers. What is important for car buyers to know is that the auto dealer can treat the clunker payment as cash, resulting in more favorable financing options for the remaining balance due.
Sources: http://www.reuters.com/article/mnGreenAutos/idUS161000020720090619; http://www.freep.com/article/20090619/NEWS15/90619020/Understanding+cash-for-clunkers+voucher+plan; http://www.cashforclunkersfacts.com/; http://www.usatoday.com/money/autos/2009-05-11-chrysler-gm-cash-clunkers_N.htm.