Cash for Clunkers Questions

I been receiving a ton of questions about the Cash for Clunkers or CARS program. There seems to be some confusion around the faq regarding the program. I thought I’d take today to share some of the questions and answers regarding the Cash for Clunkers program.

Q: Is Cash for Clunkers a scam?

No. The U.S. Government’s Cash for Clunkers (or CARS) Program is not a scam. It’s a legitimate program administered by the Department of Transportation. There are, however, plenty of scams popping up that are trying to take advantage of consumers looking to participate in the program. For more, see: Beware of Cash for Clunkers Scams. A better question might be, will it work? or will it be an efficient use of our tax dollars?

Q: When does the Cash for Clunkers or CARS program begin and how long does it last?

The Cars for Clunkers bill was made into law on June 25, 2009. The program was implemented on July 24, 2009. But transactions taking place between June 1, 2009 and November 1, 2009 are eligible. Note that funds for the program may run out prior to November 1, 2009.

Q: Where do I go to find the “official” government information about the CARS program?

Please visit the official Department of Transportation website at CARS.gov or call the CARS hotline at (866)-CAR-7891.

Q: Does the clunker trade-in need to have been registered and insured in your name for at least a year?

As far as I can tell, the clunker must have been registered in your name for at least one year. The CARS website says that the vehicle must have been insured for at least one year. I don’t know if there is a requirement that it must have been insured by youfor that year. So there could be a situation where the clunker is registered in your name, but insured in someone else’s name (i.e. relative) and the clunker still be eligible. I tried calling the hotline but couldn’t get through. If anyone has a definite answer on this, please let me know. Update: Reader LV was kind enough to comment on another post and answer this question:

“The ruling posted on the government website specifically states “The Act’s one year insurance requirement is satisfied so long as the trade-in vehicle is insured, irrespective of the identity of the person holding the insurance policy.”
http://www.cars.gov/files/TheRule.pdf”

Thanks for the help, LV.

Q: My clunker is really old. How old can my clunker be to meet the requirements for this program?

The clunker needs to be less than 25 years old on the date you trade it in. The date the vehicle was made is located on the safety sticker found on the frame of the driver side door. Remember also that the clunker has to be in working condition. You can’t push it in.

Q: I’m currently leasing a vehicle? Does it qualify as my clunker?

No. You need to own the vehicle for it to be eligible. But you can trade-in a clunker that you own for a new car lease.

Q: Can you trade a clunker car for credit towards a new truck? And can you trade a clunker truck for credit towards a new car?

Yes. As long as the clunker and new car meet the miles per gallon (mpg) requirements and other requirements, it doesn’t matter if it is a car or a truck.

Q: What will the dealership do with my clunker once I trade it in?

The clunker cannot be re-sold. It must be destroyed. The dealer will likely sell it to a scrap yard. It’s possible some parts may be stripped from the cars. But the main body and drive chain must be destroyed.

Q: Can I get a “new to me” used car with the Cash for Clunkers program?

No. You must buy or lease (for 5 years) a brand new vehicle. Used cars are not allowed.

Q: Can I get a new 2008 vehicle?

Yes. As long as it’s new, not used, it is eligible.

Q: Can I trade in a clunker for a new motorcycle?

No. This only applied to autos.

More Cash for Clunker Q&A

If your question wasn’t answered above, please check out my previous post on the Cash for Clunkers program, or visit the Department of Transportation website for the program at CARS.gov.

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Last Edited: July 2, 2010 @ 4:37 pm

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Daniel - Sorry, but you no, you can't just take that money. You have to spend it on the new car immediately.

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Daniel

When we trade our clunker in for a 2009 vehicle will they cut us a check for our clunker or will it go toward our new car ? My wife has one more year left in college and we would like to use that money for our monthly payments on our new car until she can get back to work. Thank you very much...

Dan, I think you just need to go to the dealer and let them sort it out. They may work with you. But I don't think they are legally required to do so.

Dan R

I bought a 2009 Honda Fit (new) on July 22nd and didn't know about the Cash for Clunkers program (and the dealer didn't tell me). I have a great trade-in: a 1991 MB 300TD 4matic (16 MPG). I can't seem to find out if I can still trade in my clunker. It seems to meet the spirit of the law but I can't find any specific rules. I called the CARS hotline but got different opinions. Any insight?
Thanks,
Dan

Jesse

and I agree with PT, this in only good for the auto industry.

@MY Journey

Its funny you should mention that. The official website says the dealer is required to honor all promotions in addition to the CARS rebate but also says something along the lines of "they will be up to their usual tricks" (not verbatim) so I am sure some will try and snake out of the deals they offer.

I disagree with the CARS program and would recommend doing tons of research before buying a new car or taking advantage of CARS offer, you can read my argument on my site.

Make no mistake, this is only a good financial decision for the auto industry.

The Little Dough Girl

I'm still not sold on this. Yes, the cars are not nearly as environmentally friendly, but I'm concerned with people who have had cars for a while and have them paid off running out to get new ones when they may not be in a position to. I'm in that situation myself. My car is a 2004 Chevy Trailblazer. It'll be paid off in the spring. It's tempting to want to trade it in and get a good fuel efficient car but it's not a wise decision for me. I think we've learned that people can't always be trusted to make the best financial decision for themselves.

@My Journey - I suspect that will happen. The best thing consumers can do is to be fully informed of all the available rebates and incentives going in. I use Edmunds.com for that research.

@Jessica - No. The cash has to be used towards the purchase of a new car. They're trying to stimulate car sales and reduce emissions at the same time.