Jul 29 2009

Cash for Clunkers – is it a deal?

07/28/09 – The federal government wants your gas guzzler off the road, and is willing to pay for the privelege.  So all you have to do is make a deal and drive your old car into the dealership, driving away in a new, more fuel efficient car.  Provided, that is, your trade-in value is below what the government will pay for the old car.  Here are most of the rules:

  • 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), and the replacement must get 22 MPG.
  • Trade-in vehicles must be registered and insured continuously by the person buying the new vehicle for the full year preceding the trade-in (so people can’t go to the car auction, pick up a lemon, and use it for their rebate).
  • The new vehicle must have a MSRP of $45,000 or less.
  • You don’t need a voucher, dealers will apply a credit at purchase.
  • Program runs from Jun 1 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.
  • The trade-in is in drivable condition.
  • You have not previously participated in the CARS program.

    • That’s what several folks did a few days ago – they made a deal for a new car under this program, and after the CARS program (yes, it’s really called that) went into effect, they found out the car they brought in didn’t qualify as a clunker, or the car they arranged to purchase didn’t qualify for the mpg spread.  The EPA, who sets the mileage ratings on the vehicles, changed the ratings of about 100 cars, just days after the legislation was signed.  I’m wondering a few things…

    1.  If the program is in effect beginning July 1, and the law wasn’t signed until July 24, how do the purchasers in-between get their rebate?

    2.  Will dealers, who made arrangements with buyers for now unqualified trades, allow those agreements to be renegotiated?

    3.  Does the $45,000 MSRP include options, or is it the base price?

    4.  How will the dealers know when the money runs out if it happens before Nov 1?

    All good questions people have asked me in the last few days.   

    Ben Smith