Cash for Clunkers – A New Stimulus Package For the Common Junta

Some of my acquaintances have lately been talking about the "Cash for Clunkers" program. In fact 2 of our friends bought a new eco friendly car Toyota Prius as a trade in for their gas guzzling Ford Explorer. There has been lot of chatter in blogosphere as well so we decided to run a story.


The Car Allowance Rebate System (CARS), popularly known as "Cash for Clunkers", was passed by US Congress in June to help jump-start struggling auto sales and to improve the environment. But some critics say the program may be economically and even environmentally counter-productive. It will be administered by the National Highway Traffic Safety Administration (NHTSA) through participating new car dealers around the US.


According to the government sponsored program if you own a drivable, registered vehicle that's less than 25 years old and gets 18 mpg or less (EPA combined), you may be able to scrap that vehicle in exchange for a $3,500 or $4,500 credit toward the purchase of a more fuel-efficient new vehicle. The CARS program is open for qualified consumers for participation between July 1, 2009 and November 1, 2009 or when authorized funds are no longer available. The House yesterday approved an additional $2 billion into the popular but financially strapped program. Let's hope there are sufficient funds for the consumers to avail of this opportunity.


Chrysler Group LLC announced Wednesday it would match the government's incentive program for most of its 2009 Chrysler, Dodge and Jeep models. The automaker will offer consumers an additional $3,500 to $4,500 rebate or zero percent financing on top of the money they will already receive from the federal government.


The popular Kelly Blue Book site, has summarized some program rules:


Trade-in vehicle

Must be in drivable condition
Must have been continuously insured and registered in the same owner's name for the one-year period immediately prior to the trade in
Must have been manufactured not earlier than 25 years before the date of trade in (some 1984 and 1985 model year vehicles won't qualify; see the manufacturing date on the driver's side door or door frame)
Must have a combined fuel economy value of 18 miles per gallon or less (work trucks don't have a maximum fuel economy requirement, but must be model year 2001 or older)


New vehicle

If you want to buy a car, you can scrap most any car, truck, SUV or van. If the fuel economy improvement is 4 mpg or greater, the credit is $3,500. If the fuel economy improvement is at least 10 mpg, the credit is $4,500. (The new car has to have a minimum combined fuel economy of 22 mpg.)
If you want to buy an SUV, minivan or non-full-size pickup truck, you can scrap most any car, truck, SUV or van. If the fuel economy improvement is 2 mpg or greater, the credit is $3,500. If the fuel economy improvement is at least 5 mpg, the credit is $4,500. (The new car has to have a minimum combined fuel economy of 22 mpg.)
If you want to buy a full-size pickup or large van, you have to scrap one or the other. If the fuel economy improvement is 1 mpg or greater, the credit is $3,500. If the fuel economy improvement is at least 2 mpg, the credit is $4,500. Alternately, you can trade a qualifying "work truck" for a $3,500 credit. (The minimum combined fuel economy for the new car is 15 mpg.)
If you want to buy a work truck, you must trade-in a qualifying work truck for a $3,500 credit.


One drawback, according to some analysts is, that the program is not limited to American manufacturers - GM, Ford or Chrysler. So a consumer is free to purchase a foreign car as long as other criteria is met. So, American Tax money that should be used to support American Products could ultimately be used to helping out foreign auto makers. Sure, some foreign auto makers build them here but the profit for their vehicles leaves the country.


At the end of the day the consumer benefits from the rebate but at the cost of tax payer's money. You decide if this is for you!



theFundooGeek recommended reading : Official Government CARS site






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