Cash For Clunkers Program - Explained
For the last few months, "the cash for clunkers program" has been making news everywhere. Financial as well as automobile industry pundits are seen on the television discussing in depth on the issue. There are commercial advertisements of cars proclaiming how cheap a car will be for a buyer if one takes advantage of the program. The internet has been flooded with different discussions on various aspects of the cash for clunkers program. In the midst of the sea of information, there is high likelihood of a common man being completely engulfed and perplexed. With the actual meaning and significance of this program still eluding many, it becomes necessary to explain this concept in a logical and systematic fashion.
Meaning of cash for clunkers program
This program was initiated by President Obama. The bill with a 1 billion dollar price tag was passed with a view to renovating the U.S. roadways through removal of old vehicles which give low fuel mileage. This initiative was designed to also indirectly boost sale of vehicles thus helping in the economic growth. The Consumer Assistance Recycle and Save Act of 2009 (CARS) is colloquially referred to by the Americans as the cash for clunkers program. Through this scheme, the potential consumer can part with his old vehicle for a new one. He can even get a cash voucher/discount coupon as an incentive which will come into use when purchasing the new vehicle. This means that your existing old car lying idly in your garage could act as a solid down payment when you purchase your new vehicle. The old vehicle is scrapped and you become the proud owner of a brand new, higher fuel efficient vehicle.
What kind of cars typically qualify as a "clunker" in this program?
Cars manufactured during the last 25 years qualify entry into the cash for clunkers program. Registration of these cars must have been completed minimum one year before you decide to participate in the scheme. Your car should be in a workable condition and must not be a junk fit for the trash bin, the conditions are very much like the ones they put on cars in car donation schemes. Thus it has to give a maximum mileage of 18MPG, as decided by the fuel economy department of the U.S. government.
How much of cash benefit can be got in the Cash for clunkers program?
The cash benefit is variable. It is mainly dependent on the new model that you are buying. In case of passenger cars, it is mandatory for the new car to have at least 22 MPG (a fuel efficiency that will save you money on your Auto Insurance too!). In case you are going for a car which has an advantage of 4MPG, you will get a credit of $3500 on the purchase. In case of a new vehicle providing minimum benefit of 10MPG, the buyer will be getting a credit of $4500 on buying the new vehicle. The new vehicle that can be bought under this scheme has to be unregistered with a MSRP under $45,000.00.
All said and done, this program has turned out to be very popular with around 450,000 clunkers been traded for new, fuel saving vehicles.