The long-awaited Cash for Clunkers legislation has passed. Here's what you need to know about the auto trade-in program:
 

1. 1) What's the official definition of a clunker? A driveable automobile made within the last 25 years, with a fuel economy rating of no more than 18 mpg.
    

2. 2) Here's how the program works: you trade in your old automobile for cash towards the purchase of a new, more efficient one. The better the mileage of the new car, the more money you'll get towards its purchase - either $3,500 or $4,500. The minimum combined fuel economy of a new car purchased under the program must be at least 22 mpg, while new small trucks and SUVs have to get at least 18 mpg, and large trucks have to get 15 mpg. The old cars will be salvaged once they're turned in.
    

3. 3) Consumers should act fast. The bill provides vouchers for one million purchases, and the window of time is only from July 1 to November 1. The bill will be revisited in the fall, and some changes may be made at that time.
    

4. 4) The program will cost four million dollars. Funds will come from TARP.
    

5. 5) Sorry, would-be entrepreneurs: it's off-limits to buy an old car and "flip" it for the program - the car must have been insured by the same owner for at least one year before the trade.
    

6. 6) The environmental idea behind the bill is that it takes old, inefficient vehicles off of the road. 
    

    

SUMMARY OF CASH-FOR-CLUNKERS AGREEMENT

		Passenger car		Light-duty truck		Large light-duty truck (6,000-8,500 lbs.)		Work truck (8,500-15,000 lbs.)
Minimum fuel economy for new vehicle		22 mpg (EPA combined)		18 mpg (EPA combined)		15 mpg (EPA combined)		Not applicable
$3,500 voucher		Mileage improvement of at least 4 mpg.		Mileage improvement of at least 2 mpg.		Mileage improvement of at least 1 mpg or trade-in of a work truck.		Trade-in must be at least pre-2002.
$4,500 voucher		Mileage improvement of at least 10 mpg.		Mileage improvement of at least 5 mpg.		Mileage improvement of at least 2 mpg.		NA
Source: House Committee on Energy and Commerce

FAQ

We have received hundreds of calls and emails with questions about the Cash for Clunkers Bill, and we have compiled a list of frequently asked questions to help calm anxious consumers.
 

If you have additional questions, after reading this page carefully, contact us.
 

Q: Is the billed signed into law yet?

A: On Thursday, June 18th the Senate voted to KEEP the Cash for Clunkers provision in the $106 billion dollar wartime spending bill.  This means that both the house and Senate have approved the spending bill and now it will go to President Obama to sign.   Consumers can start purchasing cars that qualify on July 1, 2009.

Q:   Are there updated conditions on the bill?

A:  The purchased vehicles, which must be new and cost no more than $45,000, must be bought between July 1 and Nov. 1 to qualify.

Q: What do I need to bring to the dealership when I but by new car and bring my trade?

A:  You need to bring: title, registration & insurance papers showing continuous registration and insurance coverage for the past full year.  In any of these are not 100% in compliance, you may not qualify.

Q: Does the Cash for Clunkers bill apply to used car purchases?

A: Currently, the language of the proposed bill is only for new car purchases.

Q:  Is the value of the voucher tax-free to the consumer?

A: Yes.

Q: Is there an income limit that disqualifies certain vehicle owners?

A: No.

Q: If I already purchased a new car, in the last few months, can the voucher apply to my past purchase?

A: Cars prior to July 1st will not qualify.

Q: If my car is worth more than $4,500, how would the Cash for Clunker voucher work?

A: The program would not provide any benefit if a car dealer would give you more than $4,500 for your trade-in.  If you want to purchase a new car, do not wait on this bill if your trade is worth more than $4,500 since it will not provide any upside relief.

Q: If dealers are offering cash incentives toward a new car purchase, would that be in addition to this voucher?

A: The program is independant from manufacturer buying incentives.  For example, if a car dealer is offering $3,000 off the list price of a car and you qualified for a $4,500 voucher from your trade, then the total reduction off the MSRP would be $7,500.  You should always shop for the best deals before buying a car.

Q: I have two old clunkers, can I trade-in both cars for a $9,000 voucher toward a new car purchase?

A: The current wording of the bill would seem to indicate that only ONE voucher can be applied to a new car purchase.

Q: How do I know if I qualify for a $3,500 voucher or a $4,500 voucher?

A: We need to wait on the final wording of the bill.  Since there are various versions of the measure in play, we will notify everyone on our email list when the final bill language is signed into law?  The amount will depend on the car you purchase and the increase in average MPG.

Q: Can I go to the junkyard a buy an old car and use it for a trade?

A: The final language of the bill is still to be decided but it seems that you will have to show that the car is operational and that you have owned the car for a period of time.  Right now, that may be a one-year period.

Q: What will happen to the car I trade in?

A: Once again, we have to wait for the final language but it would seem that the car would be recycled so cars that are worth more than $4,500 on a trade would not be viable for this program.

Q: My car is old and originally got more than 18 mpg, but now it gets 14 mpg.  Will it qualify?

A: That is another popular question.  We will have to wait and see if the bill provides a reasonable assessment of current MPG versus original manufacturer EPA MPG.

Q: How long will the program last?

A: That is still unknown.  Some insiders were hoping to get funding that would keep the program running for one year.  However, if funding is reduced, the program may only last a few months.  That is why we encourage all consumers to connect with us now, so your paperwork can be lined up when the bill is signed into law.

Q: Are there restriction on the year of my trade-in?

A: The car can not be any older than a 1984 model year vehicle.

Q: Why would some trades qualify for $3,500 and other trades get $4,500?

A: The difference in vouchers depends on the improved gas mileage as compared to your trade.  For example, if your new car purchase gets 4 mpg more than your trade you get $3,500. If the new car gets 10 mpg better than your trade you get $4,500.

Q: What if my trade-in is worth more than $4,500?

A: This program does not apply to you because you will be better off trading the car in through traditional channels. All cars that are part of the Cash for Clunkers bill we be sent to the scrapyard.

Q: I have an old clunker truck that gets under 18 mpg.  Can I trade that in for a car that gets over 22 MPG?

A: It would seem that you will be able to trade it in. We will wait on the final wording on the bill since this is a very popular question.

Q: My parents own an old clunker.  Can I transfer the title into my name and use it for a Cash for Clunkers trade-in?

A: It would seem that unless you have the car register in your name for at least a year, the answer would be no.

Q:  Can I buy any new car and still qualify?  Does it have to be an American manufacturer?

A:  You can buy any new car: foreign or domestic.

Q: Can I lease a car or do I have to purchase/finance it?

A:  Qualifying leases must be at least 5 years long.  You can finance the car under any term you qualify for.

Bonus Assistance

Q: How can I find out the current EPA MPG estimates for the car I drive?

 A: Visit: http://www.fueleconomy.gov/