Three weeks ago, President Obama signed into law the Cash for Clunkers Program that has been working its way through Congress over the last several months. The gist of the program: trade in your old gas-guzzler for a shiny, new efficient automobile and get an instant rebate from the government to the tune of $4,500. Cash for Clunkers is being billed as a win for consumers who want to trade in an old, inefficient vehicle, the auto industry which will see a boost to their sales numbers, and for society at large who will benefit by an increase to the average fuel economy of our nation’s auto fleet, reducing CO2 emissions and our dependence on foreign oil. How could we go wrong?
My little, old Ford Ranger still putters along just fine, but I’m afraid it likely won’t last too much longer. I’ve implemented all the hypermiling tricks I can, but I still worry that it might be on its way out. With dollar signs in my eyes, a-researching I went to see if there is any feasible way that I could benefit from this program. Here’s what I uncovered about the program:
Does my current car qualify?
There are few hoops Ol’ Bessy’ll have to jump through before you’re riding the rebate train to motor city. These are the most important ones you should know about:
- Your car needs to be less than 25 years old. If your auto was manufactured before 1984, you can’t feed at this government trough. I can’t say that I understand this requirement. If we’re aiming to improve efficiency, shouldn’t we accept any inefficient car still running, regardless of age? Either way, the Ranger qualifies here.
- Qualifying autos must get 18 mpg or less. If you were responsible to begin with and bought a more efficient vehicle, it will not qualify for this program. This number is based on the new EPA ratings found here. The midle number in red is what you’re looking for. The Ranger qualifies here as well at exactly 18 mpg.
- You can’t go buy a clunker and trade it in. When you show up at the dealership, you must provide proof that your car has been continuously owned, registered, and insured in your name for the last year. This is where poor, ol’ Ranger falls out of eligibility. I have owned, operated, and insured my truck for some time now, but my dad originally bought it when I was 18. The title is still in his name. A technicality, but I doubt any exceptions will be made for such circumstances in a federal program.
What new cars qualify?
If your current vehicle qualifies, you can move on to the next step of figuring out what new cars you can buy and still qualify for the incentive. These are the most notable rules:
- The MSRP must be less than $45,000. This figure seems just high enough to allow you to buy most of the latest and greatest efficiency technology, but bars you from trading up to some ridiculous luxury auto. Fair enough, I guess.
- It must be brand spankin’ new. You cannot trade your clunker in for any kind of used automobile and qualify for this program. We’re trying to spur consumerism and save our beloved auto-makers here, people! I don’t like this rule. I think we’re sending the wrong message by implying that we can only support the economy by buying something new. I would like to see a program like this cover late model, used vehicles that meet all the other critera.
- Your new car’s rating must be at least 4 mpg better. But consider that 4 mpg will only get you an allowance of $3,500. To receive the full $4,500 rebate you must improve your milage by 10 mpg. This only applies to passenger cars, though. The chart below demonstrates the fuel economy requirements for different types of vehicles.
The various fuel economy requirements for different types of new vehicles
What should I know if I’m going to take advantage of this?
There are a few more things you should know about the Cash for Clunkers Program if you’ve decided that you need a new car and will be eligible to participate.
- Rebates won’t take effect until late July. All the final details of how this program is going to work are still being figured out. Currently, the scheduled date for implementation is “sometime next week.”
- They won’t last long. The language of the program states that there will be $1 billion to fund these rebates and the program will expire in October or when the program runs out of money, whichever comes first. Current estimates expect the money to last only through August. However, my skeptical mind tells me this might just be hype to get people to act fast. The economy is still in really bad shape, unfortunately.
- You won’t get full trade in value for your current car. Since the rules of the Cash for Clunkers program states that all cars collected must be scrapped, you will likely only be able to recieve the scrap value for your trade-in. So, if your current car qualifies, but is still worth more than the rebate you’ll get, it would make little financial sense to take it.
Should I participate?
I don’t know. How’s that for an answer? 
Everybody is different. Weigh your options and your actual needs and do what’s best for you. On a more general note, a program like this brings up some mixed feelings for me. I ask myself questions like:
- Is this really a good way to improve our nation’s fuel economy? The cars taken off the road by this program will be scrapped and you can only trade-in for a new vehicle. Something just feels irresponsible about throwing out something that still works (trade-ins must be in drivable condition) and only rewarding those that purchase something new.
- Are we really gaining that much? It seems like the program’s mpg improvement rules are a bit lax. I understand that there were a lot of complex issues to address when deciding to implement a program like this and probably a lot of political trade-offs to make it happen, but how much good are we really doing ourselves by giving $3,500 to someone who only improves their gas mileage by 2 mpg (minimum requirement for a light duty truck)
I’m not saying that this was the right or wrong thing for Congress to do, but these kinds of questions weigh heavily on my mind when I think about what we’re really getting for our money. For all the current rules of the program and a (somewhat) comprehensive list of FAQs, check out the official website at cars.gov.
What do you think? Is this going to help us out of our recession? Is it going to improve the efficiency of our nation’s auto fleet? Are you going to take advantage of the program? What will you trade in?
