Cash for Clunkers Guide

Cash for Clunkers—now known as the Car Allowance Rebate System (CARS) was recently signed by Barack Obama in hopes of stimulating the auto industry in a eco-friendly way. CARS will provide vouchers up to $3,500 if the new vehicle purchased is at least 4 mpg higher than your used car and up to $4,500 if the new vehicle is at least 10 mpg higher than your old car.

But before you head over to your local car dealer, consider whether you qualify for the program and whether the program will help you save money. Because the vouchers are a replacement of—not in addition to—the trade-in value of your vehicle, you may be able to negotiate a better deal than the voucher.

Should you participate in the “Cash for Clunkers” program? Here are some tips to help you consider the impact of the C.A.R.S. program:

1. Check to See if you Qualify
   To qualify for the voucher, your used car must:
   -    Be in drivable condition
   -    Have been continuously insured to the same owner for at least one year prior to trade
   -    Be less than 25 years old
   -    Have a  fuel economy of less than 18 mpg
   Edmunds has created a list of eligible cars (PDF)from their database.
2. Determine the trade-in value of your used car
   While your car may qualify for the CARS program, you may be able to save more money by selling it yourself or taking the trade-in value. If your car is worth more than $4,500, the CARS program is likely not for you because you would be losing money. However, if your car is worth less than $3,500, the program may be more appropriate if you are in the market for a car.
3. Check your Budget
   Sure, the voucher you receive may be more than your car is worth, but if car payments will stretch your budget, it is wise to consider holding off on participating in this program. The voucher only applies to the sale of new cars, so the monthly payments of a new car may just be too much for some people. Also, if you prefer a used vehicle or find a better deal on a used car, then you probably don’t want to use the voucher.
4. Be on the Lookout for More Savings
   If you have been considering buying a new car and your vehicles qualifies for a voucher, make sure to check your local ads for additional savings and rebates from independent dealers. Just because you are getting check from the government, doesn’t mean you shouldn’t negotiate for the best price.

For more information, you can visit the Offical CARS Website.

Tagged as: Car Laws, CARS, Old Cars