Cash for Clunkers

Cash for Clunkers bill basics

The Cash for Clunkers bill purpose is to get dilapidated fuel thirsty cars off the US roads and replace them with new fuel efficient vehicles. The bill will last until November 1st 2009 or until the budget run out. So, decide and act fast if you want to take advantage of it. The two results expected are a boost to car sales and the reduction of fuel consumption (and consequently of air pollution and the US carbon dioxide footprint)

You can get an effective trade in value of $4,500 (or $3,500 as detailed bellow) from your car dealer when you buy a new fuel efficient vehicle, regardless of the actual market value of the car. The car dealer must turn in the clunker to be recycled and he can’t resell it

Obviously, if your car market value is more than $4,500 (or $3,500 as detailed bellow) this is not your avenue and you don’t need this federal support

The rules

• The car you want to trade in must have a valid license and a valid insurance for at least a year and is in driving conditions. You can’t turn in a dilapidated car that was not moving or that is not in use
• The new car is more energy efficient than the car you turn in (see fueleconomy.gov for fuel economy ratings), they must have better mileage per gallon
• The car you turned in was manufactured after 1984 and its fuel consumption is worse than 18 miles per gallon

The fuel economy requirements from the new vehicle

• For a car, fuel consumption better than 22 miles per gallon
• For SUV, fuel consumption better than 18 miles per gallon
• For a small truck, fuel consumption better than 15 miles per gallon

$4,500 or $3,500?

If the new car is better by at least 4 miles per gallon than the old one the credit is $3,500. If the new car is better by at least 10 miles per gallon than the old one the credit is $4,500

If the new SUV (or small truck) is better by at least 2 miles per gallon than the old one the credit is $3,500. If the new SUV or small truck is better by at least 5 miles per gallon than the old one the credit is $4,500

Can you enjoy other credits?

Yes, for example you can get the credit on purchasing an hybrid car, or state and local sales tax deduction

What about leasing the new car?

You can lease the new car, but the lease contract must be for 5 years or longer