Today President Obama signed into law a new program being called "Car Allowance Rebate System" (CARS); we've previously been referring to it as "Cash for Clunkers." This government program is intended to help consumers purchase a new, more fuel-efficient vehicle when they trade in a less fuel-efficient vehicle. Official information is available here at www.cars.gov.
The new CARS law allows consumers to receive up to a $4,500 credit when trading in their old gas guzzler for a more fuel-efficient new vehicle. Qualifying vehicles are considered passenger cars, mini vans, SUVs and small light-duty trucks that get less than 18 mpg, and large light-duty trucks that get less than 15 mpg city/highway combined. For passenger cars, if the new vehicle is at least four mpg more fuel-efficient than the old vehicle, consumers will receive a $3,500 credit toward a new vehicle. If the new vehicle is at least 10 mpg more fuel-efficient than the old vehicle, the credit is good for $4,500.
If you're not sure whether your car qualifies, you can find out how your car is rated by searching at fueleconomy.gov (I was disappointed to discover that my 1989 Honda Accord does not qualify for a voucher because it is too fuel efficient, though I'm sure my car is relieved that it is neither a gas-guzzler, nor a clunker.) Once you locate your vehicle, the magic "combined fuel economy figure" is displayed in red. This number is based on 45% highway economy plus 55% city economy and DOES reflect the new ratings method the EPA implemented in 2008 to reflect faster driving habits, air conditioner use, and cooler outside temperatures. If you're handy with a calculator, the formula looks like this: (City x .55) + (Hwy x .45) = the magic number.
The National Highway Transportation and Safety Association (NHTSA) is expecting implementation within in 30 days. The law requires dealers to be registered before they can participate in the program, so shoppers may want to contact their local dealer in mid-July to see if they are ready to utilize the program.
Important things you must know:
Even though discussions up to now have discussed vouchers, you do not need a voucher: Dealers will apply a credit at purchase.
Your vehicle must be less than 25 years old on the trade-in date.
The credits only apply toward the purchase or lease of new vehicles and you may trade in or buy a domestic or a foreign vehicle.
The vehicle being traded in must get fewer than 18 MPG (though some very large pick-up trucks and cargo vans have different requirements).
Vehicles being traded in must have been registered and continuously insured for the full year preceding the trade-in, and be in driveable condition.
This is not a retroactive program: if you recently traded in an old car for a new vehicle, you're out of luck.
Ready to go shopping? Do your research first here at our online New Car Buyer's Guide
By Brandy Schaffels, autoMedia.com Contributing Editor