The Car Allowance Rebate System, formerly known as the Cash-for-Clunkers bill, takes effect today, July 1.
Yesterday, President Barack Obama signed the bill into law that pays consumers up to $4,500 in credit for trading in their cars or trucks for more fuel-efficient vehicles. The $1 billion program is overseen by The National Highway Traffic Safety Administration.
Details of how the plan will be rolled out are still being discussed. The full release is expected by July 24, but cars purchased between July 1 and Nov. 1, 2009 (if the funds do not run out before that) will qualify.
Here are some requirements listed from the CARS program website:
- Your vehicle must be less than 25 years old on the trade-in date.
- Only purchases or leases of new vehicles qualify.
- Generally, the vehicles you trade in must get 18 or fewer miles per gallon. You can check your current car's gas mileage estimate here.
- The new car being purchased must get a minimum of 22 miles per gallon and cannot exceed a price of $45,000.
- The vehicle you trade in must be drivable.
- Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in.
- The vehicle that you are trading in is required to be destroyed. Therefore, the value negotiated with the dealer for your trade-in is not likely to exceed its scrap value.
The CARS rebate does not count on top of the trade-in value of your vehicle. When you trade your car in, you do not need to do any paperwork with the government because the dealer will apply the credit when you buy the new vehicle.
The bill is designed for people with older, inefficient cars who are looking for new, more fuel-efficient cars. But there have been criticisms that the purpose of the bill is more for stimulating car sales than greening America’s fleet, since the gas mileage standard is just a 4 mpg increase.
Others, such as the Washington Post, are criticizing the bill for not providing enough money. The $1 billion of credits is only expected to increase car sales by 250,000 cars. Businessweek quoted Jeremy Anwyl, chief executive of Edmunds, saying that the program will not help the auto industry because auto sales would need to increase by 3 million vehicles more to get them out of the bad situation they are in now. But most automakers and auto dealers support the program.
What do you think about the new program? If you qualify, what kind of car would you get? If you don’t qualify, what kind of car would you want to get? Share your thoughts by posting a comment below.