As you might have heard the Cash for Clunkers bill was passed a few days ago. It is now waiting for the president to sign it (which he has said he will) and then the ball will be rolling.
Cash for Clunker’s explained
Basically, as I understand it, how it will work is that the government will give you a voucher of $3500-$4500 to use if you trade in your 18-MPG or worse gas guzzler. The amount of the voucher will be based on the MPGs of the new car. If it is 4-MPG better you will get $3500, if it is 10-MPG better you will get $4500.
It is important to note that this is not like the $8000 tax credit for first-time home buyers, it is a voucher that is an equivalent to cash that can be used for a car purchase.
How to know if your car qualifies
I did a bit of research and am having a hard time getting all of my questions answered about the CFC bill. I did find out that you can tell what the government says your MPG rating is at FuelEconomy.gov by looking up your specific make and model year.
But I have yet to find an answer to whether it is the city or HWY MPGs that allow it to qualify. My hunch, and hope, is that if either fall below the 18-MPG limit, then that car will be eligible. Also, it seems that you must have owned the car for at least a year in order to trade it in.
What cars qualify for purchase
According to the current language of the bill, it looks like only NEW cars are eligible. Personally I am a little annoyed by this, I think if they allowed the voucher to be used for USED cars 2006 and newer, it would benefit a lot more people. But part of the purpose of this bill is to stimulate the auto-industry, therefore they need to push new cars.
Cash for Clunkers in the news
This is a recent news video explaining a few more details about the proposed bill…
http://www.youtube.com/watch?v=P4tdv9RJtGE
Do you have more questions? Yea, me too…
If you have more questions, you can find some answers at CashForClunkersFacts.com. But until the bill is finalized, it will likely be difficult to get answers that you can be completely confident in.
What do you think? It the Cash for Clunker’s deal one that you’d be interested in?
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Personally, I do not think it would be worth it for us since it is for new car purchases only. It might be something we would consider if – like you said Bob – it applied to purchases of 2006 or later models.
I think we would save more money by trading in our paid-off 2003 mini-van for a good used car with low mileage.
I guess it looks like I’m holding onto my 91 Buick Regal a little longer since A) It is 20 MPG and B) I’m not buying a New Car.
This deal is lousy.
1) You car has some value. So whatever your “trade in” is worth should be deducted from the value of the voucher. If your “gas guzzler” is worth $2,500, then that $4,500 voucher only nets you $2,000.
2) When you use that voucher to buy a new car, you will get $X off the price. That figure is likely to be less than the one year depreciation on the car, which begins (steeply) the moment you drive it off the lot.
If the government were serious, this plan would have included used cars.
Now there is my tax money going to a good cause!
*insert sarcastic smiley face*
OK, I don’t want to offend car dealers that might be reading, but wouldn’t a car dealer likely use this to their advantage.
Typically a new car dealer makes money 5 different ways when you buy a new car.
1. The new car itself
2. The money they make on the trade-in
3. The fee they get when you finance the new car through the dealer (the bank charges them one interest rate and they charge you a higher rate, keeping the spread as profit)
4. Added fees and accessories like rustproofing
5. Extended warranties
At SOME dealers when a customer concentrates on one part of the deal, say getting the lowest price on the car, the dealer will oblige by giving the customer a “great” deal but then make up the profit by offering less for the trade-in or offer a higher finance rate.
The trap I see some consumers falling into is that they become so concerned with getting the clunker rebate that they lose focus on the other aspects of the deal and not haggle for the lowest new car prices, best finance rate, etc.
i am a single mother of 2 and i dont think the vouchers should be towards only new cars.i would gladly trade in my car if i could use the voucher on a used car. people cant afford making payments on a brand new car.its more likely people would trade in their cars and buy a good used car or a better car that they can afford.it sure would be nice,if poor people like me had a chance to get a voucher and trade in on our cars,and not owe anything.i was never lucky enough to ever even own a brand new car.i wouldnt even have a car if it wasnt for my income tax money
When it comes to MPG on your current car it is the average of both City MPG and Highway MPG…which sucks considering I have a Dodge Intrepid that gets 18 MPG City and 28 MPG Highway…That makes my cars adverage mph 22…therefore my car…which is older and doesn’t get the same gas mileage as it did when it was new…DOES NOT QUALIFY..
thanks for bursting my bubble Ashley