The Color of Money: 'Cash for Clunkers' Is a Lemon
If you have a clunker that's also a gas guzzler, the federal government wants you to trade in the car so it can be scrapped -- while you get a cash credit toward the purchase of a new, more fuel-efficient vehicle.
The Consumer Assistance to Recycle and Save Act of 2009, or CARS, was pushed through Congress and signed by President Obama, purportedly to cut down on harmful vehicle emissions.
But in truth, this is welfare for the limping auto industry.
The National Highway Traffic Safety Administration (NHTSA) has been given $1 billion to fund the program. But the law does not apply to the purchase of used cars, encourages people to take on more debt and doesn't require the new cars to get substantially better gas mileage.
Oh, well -- no use crying over soon-to-be-unwisely-spent taxpayer money.
So if you were thinking of trading in your aging car, here's your chance to get some government money. But before you rush to a dealer, you need to know about the program's details.
Specifically, CARS -- dubbed "Cash for Clunkers" -- provides $3,500 or $4,500 to help people buy a more fuel-efficient car, van, sport-utility vehicle or pickup from a participating dealer when they trade in an older, less fuel-efficient vehicle. Which amount you get depends on the type of car you buy and the difference in fuel economy between the one you're buying and the trade-in.
To qualify for the program, your trade-in must meet, among other things, the following conditions:
-- The vehicle must be drivable.
-- It has to have been continuously insured and registered to you for one year before the trade-in. This provision was put in the law so no one would buy a junkyard car to try to get the cash credit.