Tuesday, June 23, 2009

Cash for Clunkers helps you trade up

The President is likely to sign the War funding appropriates bill, possibly this week. You should care about this because it also includes the “Cash for Clunkers” bill that’s been creating so much interest.

Okay, first a side trip ... Lately it seems quite a few people have asked me how things like guns in state parks and Cash for Clunkers get lumped in with unrelated legislation, like war funding and credit card reform. I don’t want to get political, but here’s the explanation. It’s common practice to include legislation that may not stand on its own in with something stronger. Line-item-veto gave presidential power to reject parts of a Bill during the Clinton administration, but that power was later revoked in 1998 when the Supreme Court ruled that the measure overreached presidential powers. ...OKAY, now let’s get back on course to Cash for Clunkers.
You can finally get rid of that old mini-van!

Cash for Clunkers hopes to remove older, energy inefficient vehicles from US roads by allowing owners to trade them for more fuel efficient vehicles with up to $4,500 incentive. But don’t let your idea of a clunker fool you.

These are the minimum qualifications:
1) The car cannot be older than 1984.
2) It must be in running condition and must have been insured for the past year.
3) Your name must be on the title for at least one year.
4) The car’s MPG must equal 18 or less.

To get cash for your car you must purchase a new car. Used cars, motorcycles and bicycles do not qualify. You could lease a new car, but the minimum lease is 5 years. To qualify for the program you must do business with an authorized dealer between July 1 and November 1, 2009.

You won’t exactly receive cash for your clunker. The program works like a trade-in. You purchase a car from a participating dealer and they take up to $4,500 off the price. The dealer than turns the car over to the government and receives the cash. It’s not clear what happens to the car after that. The intention is to recycle it.

The program is independent from manufacturer buying incentives. In theory, 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.

Cash for Clunker credit ranges from $3,500 to $4,500 dependent on the fuel mileage improvement of your purchase. If you trade in your car for one that has at least 4 mpg better fuel economy than your old one, you'll receive $3,500. The credit goes up to $4,500 if the new car’s combined fuel economy is at least 10 mpg higher.

The requirements are lower for trucks and SUVs: A new small truck or SUV must get at least 2 mpg more than the old one to get a $3,500 credit; 5 mpg for a $4,500 credit. For large light-duty trucks (6,000-8,500 pounds), the old one must be rated 18 mpg or less and the new one must get at least 1 mpg better for the $3,500 credit and 2 mpg better for the $4,500 credit.

Since work trucks (8,500-10,000 pounds) don’t have fuel economy ratings, the legislation goes by model year: The old truck must be from 2002 or before to qualify for a $3,500 credit.

Cash for Clunkers raises so many questions that an FAQ site has been setup by Brian Pasch, CEO of the Pasch Consulting Group. (http://www.cashforclunkersfacts.com/bill-faq) Note that this is not a government website and does include advertising; however, it’s a great FAQ and is updated frequently.

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