How to Cash for Clunkers Program

The Car Allowance Rebate System (CARS) or Cash for Clunkers, was a $3 billion legislation plan passed by the Congress to provide car incentives for U.S citizens to get old ‘clunker’ off the road and replace, or more appropriately, trade them with new, more fuel-efficiently vehicles.

The program began in July 2009 with an initial $1 billion allocation and all resources were exhausted in the first month, even though the deadline date was set for November of that year. With the project being a resounding success, the Congress further allocated $2 billion which was also consumed instantly. Reportedly, it was estimated that almost half a million cars were traded, with the Department of Transportation confirming that  the fuel-efficiency improved by more than 50%.


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    When the program was in place, the consumers were entitled to receive a credit amount in between $3500 and $ 4500. You would trade in your old car and get cash to purchase a new one, which is fuel efficient.

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    Much depended on the fuel consumption of the new car, as according to the program, it must be at least 22 mpg. However for SUVs and large targets, the numbers were set at 18 mpg and 15 mpg respectively. For instance you would get $3500 credit if the new car got less than 10 miles ( per gallon) fuel efficiency when compared to your old one. If it gives more than 10 miles per gallon, the participant received $4500.

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    Your old vehicle must not be more than 25 years old, i.e. any consumer possessing a model from before 1984 was not eligible to participate in the program. Moreover, it must be owned by you or be registered in your name for at least 12 months. This provision was placed so that people do not run to the junk yard and buy clunkers for trade-in.

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    If your trade was recognized as reliable, then you would have been eligible to buy a new vehicle.  In order to get the desired rebate, as mentioned before, you new car must give at least 22 miles per gallon. However, that will vary on the vehicle you buy.

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    Wondering what happened to the old cars? – They were scrapped and salvaged after being turned in by the consumers.  The dealer was further required to provide an estimate of the scrap value.  This amount, although very low, was also given to the consumer in addition to the rebate.

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