Obama's plus billion dollar effort to get the old gas guzzlers off the road ignited some initial enthusiasm among car buyers for the Cash for Clunkers program. Unfortunately, as some Americans thought they could head out to the car dealers and receive a $4500. voucher for their trade-ins, restrictions abound for what car qualifies.
Essentially, the government will offer vouchers of up to $4,500 toward the purchase of a new car or truck for the consumer who brings in a qualifying car to be crushed - provided the old car was built after 1984 and gets less than 18 miles per gallon. The new car also has to achieve at least 4 mpg more than the old one, which has to have been insured and operated by the buyer for one year. Oh, and the replacement vehicle's value can't exceed $45,000. There's more: Different rules apply for SUVs and trucks, and it doesn't help at all if the old car or truck is worth more than the voucher. The buyer would lose money.
Monitor Bank Rates says the big "gotcha" to many customers is " your trade-in vehicle must be registered and continuously have auto insurance coverage for the prior year to the trade-in date. You can’t buy a $500 clunker and expect to get a $3,500 or $4,500 credit. Your trade-in vehicle must also be destroyed, which lowers the estimated value to scrap value".
The "Cash for Clunkers" is respectfully known as the Car Allowance Rebate System.
Another concern some have towards the program is that many Americans who can not afford 2010 year new cars will have these less efficient ones removed from the market.