President Obama signed the Car Allowance Rebate System program, which is better known as CARS. The program is being renamed the Cash for Clunkers program in the media because of its intended purpose. In this article, we take a look at the rules for the program.

The Cash for Clunkers program is designed to help people buy a new, fuel efficient car by trading in an old clunker that gets poor mileage. This goal is achieved by providing a rebate on the new car purchase at a dealer. The rebate is not in addition to any trade-in value for your old car, but a replacement for that trade in. The total amount is no more than $4,500.

The Cash for Clunkers program does not apply to every possible old clunker. Nope. We are talking about a government act, so you know there are going to be a host of rules. Actually, they are not too bad in this case. To qualify for the program, your car must be less than 25 years old. You must have owned, registered and insured it for a minimum of one continuous year. It must be in drivable condition. It must get less than 18 miles to the gallon when city and highway mileage is combined. The new car you are buying cannot cost more than $45,000.

The interesting thing about the Cash for Clunkers program is the trade in value of your old clunker. You cannot look to Kelly’s Blue Book or some other independent source for the valuation. Why? Well, it has to do with what is going to happen to your old car or truck. When it is traded in, the dealer will not fix it up and resell it. Instead, the law requires that the car be destroyed. As a result, the dealer is only going to offer you a trade in value that is equal to the scrap price of your vehicle.

The Cash for Clunkers program is now an official program, but the exact details of how it will work in the public environment are still open to change. The National Highway Traffic Safety Administration is in charge of implementing the program and has indicated it will be late July 2009 before it does so. In short, keep an eye out for further developments which will undoubtedly be broadcast in the news.

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