Well, there’s big Internet noise about the opening of the government’s program to redeem your old (but not too old) car for cash. Formally called the Car Allowance Rebate System (CARS; clever, these acronymic bureaucrats), the Cash for Clunkers program has excited potential car traders everywhere.
There’s a happy story in the Chicago Tribune about the Musinski family, who finally brought themselves to part with their 1990 Ford Econoline van. “Belching black smoke and rusting from the wheels up, the once-rockin’ van—replete with curtains, a TV, and even a CB radio”—made its last mile to their local dealer. Worth about $300 street value and rated at 11 mpg, the clunker earned the Musinskis $4,500 on a 2009 Hyundai Accent, listing for $14,485. After discounts and the Clunker rebate, they paid $8,259, a helluva price for a new car.
If your trade meets the requirements (made within the past 25 years, drivable, rated at 18 mpg or less when new), you get a $4,500 rebate. Rated at 22 to 19 mpg, you get $3,500. There are some other twists and turns in the rules, so check with the CARS site.
Already dealers are complaining they can’t get on the website to register, some are getting rejected, and they don’t like the fact that they have to disable the clunker’s engine by running it for 7 minutes with sodium silicate instead of oil. They also don’t like the fact that they have to get the titles of the cars from the owners to get the federal reimbursement. To which we say, “Suck it up, dealers – the gravy train is over. You’re even getting reimbursed $50 for each car you disable.”
Some car companies are trying to throw blood in the water by adding their own rebates to the government’s. Chrysler is making much of its offer to add up to $4,500 or zero-percent financing for 72 months on Chrysler, Jeep, or Dodge vehicles bought by August 31, whether or not a trade-in qualifies for the CARS program. Mazda is adding a $500 cash incentive “if you qualify for the full Clunker rebate.” Toyota is offering special 60-month leases for the Clunker program with very attractive rates.
If you go the Clunker route, watch out for scams, and follow the Better Business Bureau’s advice:
- Avoid anyone who offers a money order, check or direct deposit for the rebate. Car buyers can only benefit from CARS by getting the reimbursement amount reduced from the purchase price of the new vehicle.
- Find the current value of the clunker on your own. If it exceeds $4,500, selling the clunker or a normal trade-in may be a more cost-effective route.
- Know the scrap value of the clunker. If the dealership takes the gas guzzler, it may be able to sell a few specified parts, but the vehicle must be destroyed. Consumers can negotiate the new vehicle price with the clunker but it will only be worth the scrap value to the dealership. Dealerships are required to give consumers a scrap value estimate.
Remember, the CARS program is for new vehicles only.
Are you thinking about trading in a qualified clunker? Please tell us about it.