Cash For Clunkers- What You Need To Know

I haven't seen much in the print media lately, but the local TV news programs are going kind of crazy (especially the morning shows) over the 'Cash for Clunkers' program.

The 'Consumer Assistance Recycle and Save' Act (also known as 'CARS' or 'Cash for Clunkers') is a $1 billion program that will provide a voucher of up to $4,500 to help offset the cost of new car purchases or leases until November.

While the program is getting a lot of attention though, there are some definete drawbacks, such as if a car is worth more than the voucher for which it qualifies the driver would be better off just taking the regular trade-in value. And vouchers don’t come as an addition to trade-in values because cars brought in under the cash-for-clunkers program have to be scrapped, so their trade-in value is essentially zero.

Plus, it's a stretch of the imagination to believe that someone driving around in a car that’s worth less than $4,500 is going to want the payments that come with a new car. There’s a reason they’re driving that car and a $4,500 discount isn't going to do much to change that.

If you're not turned off by any of that though and are interested in more details, here are some of the requirements:

- Your vehicle must be less than 25 years old on the trade-in date
- Only purchase or lease of new vehicles qualify
- Generally, trade-in vehicles must get 18 or less MPG (some very large pick-up trucks and cargo vans have different requirements)
- Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in
- You don't need a voucher, dealers will apply a credit at purchase
- Program runs through Nov 1, 2009 or when the funds are exhausted, whichever comes first.
- The program requires the scrapping of your eligible trade-in vehicle, and that the dealer disclose to you an estimate of the scrap value of your trade-in. The scrap value, however minimal, will be in addition to the rebate, and not in place of the rebate.

For even more details, the government has set upthe cars.gov website to answer questions on the 'Cash for Clunkers' program.