Clyde’s Story — WSJ — Forbes — NYT (The Lede) — The Business Insider — The Heritage Foundation — Cash For Clunker FAQ
Update II :
“It’s been a thrill to be part of the best economic news story in America,”
Secretary Ray LaHood said in a statement.
“Now we are working toward an orderly wind down of this very popular program.”
UPDATE: Senate OK’s $2 billion more Cash for Clunkers!!!
Washington DC is spending our money. Note: Clyde is still alive…
This is a true story. This could only happen in America! For my foreign readers, please do not tell your friends in London, Madrid, and Paris this story is not true. This is the new one world under ObamaEcon called “Clunkernomics”.
In 2001, I wanted to buy a SUV and I purchased a used 1995 Jeep Grand Cherokee 4×4 Limited with 80,000 miles for $7000 cash. I named my Jeep “Clyde” after the previous owner. This is a Southern thing. We like to give names to our things!
Now, being the Capitalist, I decided to research “Clunkernomics” to see if this new ObamaEcon model might be a good program after all since the liberals, the American media, and Obama supporters keep talking about how this is the greatest President since Kennedy.
First, I called my accountant and he had some concerns. He said I may incur a Federal and State tax liability. Now I was worried. What should I do? I knew better than to call my Congressman John Barrow since they don’t answer the phone. I had a backup plan! I called my other Congressman Kingston who I know is very sharp. Jack is the man!
Sure enough, I called the official Jack Kingston in Washington DC. Low and behold they found LuckyBogey the answer. His staff was not sure, however since this is Washington, and Jack is an up-and-comer within the GOP, his crackpot staff researched the issue and promptly called me back.
Now I was excited! The staffer informed me that there would not be any Federal tax liability however some states have different tax laws for the total purchased amount. Now it was time to call my local dealer in Savannah.
I called the local Honda deal down on Abercorn Street. For those unfamiliar with the metro Savannah area, Abercorn Street is very congested and sometimes it take at least five minutes to go from one mall to the other mall. Sometimes we receive notices of “Hot Spots” on the radio (i.e. Police radar hideouts).
Sure enough, the local Honda dealer answered on the first ring. A salesman, named Jack was immediately called on the PA system. He informed me that he would buy “Clyde” as is. No questions asked as long as I could drive it there, had insurance, had proof of ownership for at least a year, Jack would personally authorize $4500 for Clyde as long as I purchased another vehicle that gave me at least 2 miles per gallon over Clyde.
Man-o-man. Now I was beginning for the first time to feel that “tingle up my leg” like Chris Mathews for ObamaEcon “Clunkernomics”. What took me so long to become a believer? Six months in office. I can’t wait for the next great Obama bailout program for the American people.
Remember, I paid $7,000 in 2001. Now in 2009, I have over 200,000 miles on Clyde and the Federal government will give me $4,500 and the dealership will also get $4,500 for a grand total of $9,000. Only in America! I finally understand what Don King means!
Oh, before I forget, Jack told me that when I come into the showroom, ask for Jack, the guy with the “White Hat”. Only in America will the federal government pay $2,000 more for Clyde than my original purchase price eight years later. Under the ObamaEcon “Clunkernomics” program, LuckyBogey will purchase a nice new quality vehicle made in Japan. Only in America!
PS: The only sad part is that Jack told me they would need to kill Clyde. I asked that this be done quickly. Jack informed me that they use a special liquid poured into the engine (See below Clunker FAQ) and it would be very quick. I really feel bad about this for Clyde has always been there for me and always ensured my safe return home. I have to sleep on this decision. I still love Clyde and please don’t think bad of me if Clyde only has one road left to travel.
Update: A reader pointed out I was incorrect on the additional $4500 for dealerships. Papasmurf said:
There is only ONE rebate from the Gov’t paid, not two. The dealer doesn’t get $4500.00 from the Gov’t. You must be confused with a manufacturer or dealer rebate. The dealer only gets his profit on the sale, and a maximum of $50.00 “administration fee” of the salvage amount. BTW, don’t forget, the dealer must pay you the salvage amount, less his 50. Right now the going rate is around .07 per pound.
(Due to the emotional attachment of our Clunkers, No Pictures/Videos showing the Killing of Clunkers are to be posted on this Blog Site.)
Let’s have a $4,500 subsidy for everything.
Americans are streaming back into auto showrooms, and one reason is the “cash for clunkers” subsidy. Democrats are naturally claiming this is a great success, while Republicans are claiming that because the program has run out of clunker cash so quickly, this proves government can’t run the health-care system. How do we elect these people? What the clunker policy really proves is that Americans aren’t stupid and will let some other taxpayer buy them a free lunch if given the chance.
The buying spree is good for the car companies, if only for the short term and for certain car models. It’s good, too, for folks who’ve been sitting on an older car or truck but weren’t sure they had the cash to trade it in for something new. Now they get a taxpayer subsidy of up to $4,500, which on some models can be 25% of the purchase price. It’s hardly surprising that Peter is willing to use a donation from his neighbor Paul, midwifed by Uncle Sugar, to class up his driveway.
On the other hand, this is crackpot economics. The subsidy won’t add to net national wealth, since it merely transfers money to one taxpayer’s pocket from someone else’s, and merely pays that taxpayer to destroy a perfectly serviceable asset in return for something he might have bought anyway. By this logic, everyone should burn the sofa and dining room set and refurnish the homestead every couple of years.
It isn’t clear this will even lead to more auto production over time, since the clunker cash may simply cause buyers to move their purchases forward. GDP will get a fillip in the third and perhaps fourth quarters, which will please the Obama Administration. But the test will be if auto sales hold up next year and into the future once the clunker checks go away. The debate over the subsidy may even have prolonged this year’s auto slump as buyers delayed their purchases waiting for the free lunch.
All of Washington professes to be surprised that the $1 billion allocated to the subsidy has been used up so quickly, but giving away money is one thing government knows how to do. The Clunkers who are in Congress are now patting themselves on the back for their great success, and the House quickly voted to pass out another $2 billion in clunker coupons. With a $1.8 trillion budget deficit, who’s going to notice this pocket change?
Clearly, we spoilsports need an attitude adjustment to Washington’s new economics. And since money is no object, let’s give everyone a $4,500 voucher for other consumer goods. Let’s have taxpayers subsidize the purchase of kitchen appliances, women’s clothing, the latest Big Bertha driver—our Taylor-made is certainly a clunker—and new fishing boats. These are hardly less deserving of subsidies than cars, and as long as everyone thinks we can conjure wealth out of $4,500 giveaways, let’s go all the way.
Steve: No Stimulus II
Steve Forbes, 08.03.09, 06:00 AM EDT
Steve Forbes debunks the need for a second stimulus and asks that current stimulus funds be allocated better.
The Obama administration has floated the idea of a second stimulus package. Are they crazy? The funds from the first stimulus package haven’t been spent and they want to start on a second?
Reckless deficit spending will only serve to weaken the dollar and our economy. Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke need to defend the greenback. A promise not to monetize future government debt would help. Some resistance to a second so-called stimulus package is also crucial.
Only $56 billion of the $787 billion stimulus has been spent so far and what’s planned doesn’t look good. The government is wasting money on pork barrel projects designed to keep congressional incumbents in their seats. They’re also throwing several hundred billion dollars into what amount to one-time rebates. All this is no way to achieve sustained, vigorous economic growth.
President Obama has gone on the greatest check-writing binge in our history, with the exception of the Civil War and World War II. If we’re going to stay on this rocky road of spending our way out of the recession, President Obama should cut the FICA tax in half for the next 18 months. That will put money in consumers’ hands, where it needs to be. It also cuts the costs of employing people.
July 31, 2009, 2:13 pm
Dealers Race to Get Their Clunkers Crushed
By Katharine Q. Seelye
Update below. The White House and Congress may be giving the “cash for clunkers” program a reprieve, but one can’t help wondering how many dealers and customers will have the confidence to go forward at this point. Things sound like a total mess in the showrooms.
“There is absolute frustration across the board,” Alex Kurkin, a lawyer based in Miami who represents several car dealerships, tells The Lede today. “As of this morning, they’re not really confident about any deals, and no one can give them advice about what they should be telling their customers.”
One thing still not clear is how many older cars have actually been sold and scrapped with the original $1 billion, and how many more the new $2 billion will be able to cover. Mr. Kurkin tells us that the government Web site where dealers are supposed to register their deals has been crashing, and the dealers haven’t been able to plug in their information.
We spent a couple of days earlier this week following the whole complex program, from dealer to scrap heap, and found twists and turns in it that are making it a nightmare now for everyone involved.
The program requires that the clunkers be put out of service for good, so dealers must destroy the engines on cars that are traded in. We watched this process yesterday at the DCH Paramus Honda in Paramus, N.J. It is quite laborious and potentially dangerous. And it certainly is final.
Nick Clites, who is in charge of used cars for the dealership, was prepping a 1988 BMW 535IS, with 214,000 miles on the odometer, for its death. He drained the oil, then donned a silky blue protective suit, goggles and gloves and poured a sodium silicate solution into the engine. He revved the car, and within a few seconds, the solution hardened into a glass-like substance, the engine seized up and the car was dead.
Well, as it turns out, a lot of them are doing so, because unless the dealers can prove to the government that they have killed the engines and scrapped the cars, the government will not reimburse them for the $3,500 or $4,500 discount that they have given the customer on a new, more efficient vehicle.
Barry Magnus, the general manager of DCH Paramus Honda, told us he was owed more than $80,000, and he wondered if he would ever see it. The government has said it would take 10 days to reimburse the dealers, but that was before the program apparently ran out of money and devolved into chaos Thursday night.
Today, dealers are frantically trying to move the old trade-ins to the scrap heap so that they can get reimbursement before the money tap shuts off. Until they can certify that the car has been decommissioned, they cannot submit their paperwork to be repaid.
“Oh my God, what a mess today,” Sally Ann Maggio, who co-owns Hackensack Auto Wreckers, also in New Jersey, said on Friday. We visited her car-crushing business on Thursday. She didn’t think much of the program to begin with.
Ms. Maggio said she generally makes her profit by reselling the engines, the most valuable parts of the cars she takes, but that’s not posible with the cars coming to her because of the cash for clunkers program, because they have been rendered unusable. That cuts down the salvage value of the cars — and the incentive for salvage yards and wreckers to take them — to almost nothing, considering the time and energy they must spend in going to the dealer, towing back the dead cars, removing the engines, crushing the bodies and shipping them to a metal scrap shredder and recycler.
And, of course, the process reduces the supply of used engines for people who can’t afford to buy a new car and come to the salvage yard looking to fix up old ones. In any case, Ms. Maggio said, dealers are “hitting the panic button” today.
“We have been overwhelmed with phone calls from the dealerships,” she said. They have already killed the engines, and want her to pick up the heaps.
And on hearing the news that the government might be pumping more money into the program, she said, they are stepping up the process. “They’re worried that the new money might last only two days,” Ms. Maggio said. “But until it’s scrapped and the paperwork is done, it’s not a done deal,” she said. “They’re driving me crazy.”
Mr. Kurkin, the lawyer in Miami, said that many dealers are attaching clauses to their sales agreements, saying that if the government money does not come through, the customer will have to make up the difference.
“If a dealer doesn’t have a separate document addressing this possibility, the dealer will likely have to eat it,” Mr. Kurkin said. “I certainly see a lot of litigation over this.”
Dealers Step In | 7:43 p.m.
While the government’s “cash for clunkers” program may be stalled at a yellow light, a group of private auto dealers is stepping into the breach.
The group, made up of about 50 of the nation’s biggest dealers, who sell both foreign and domestic makes, are hoping to capitalize on the popularity of the “cash for clunkers” program with their own “automotive stimulus program,” but with looser requirements.
“So many customers were so close to qualifying,” but their cars did not meet the government requirement of getting less than 18 miles per gallon, said Brian Benstock, general manager of Paragon Honda, Paragon Acura of Brooklyn, and one of the participating dealers. Still, he said, the government program was clearly successful, which is why it ran out of money. On Friday, the House voted to add $2 billion to the program; the Senate is to vote next week.
Set to run for 12 weeks, the dealers’ plan requires that the clunkers being traded in have been registered and insured by the owner for just six months, half the government’s requirement. It also allows customers to trade in their clunkers for used cars, not just new ones.
“Clunker customers would like the option of going from a 15-year-old car to a 5-year-old car,” Mr. Benstock said. The government plan requires that the customer buy a new car that gets at least 4 more miles per gallon than the clunker; the dealers’ plan says only that the replacement car be more fuel-efficient, so it could get just one more mile per gallon.
That may help sales, but is likely to do little for the environment. But experts said the government plan would do little for the environment either.
Michael Gerrard, director of Columbia Law School’s Center for Climate Change Law, said in a statement that the cash-for-clunker program is not a cost-effective way to reduce fuel use or greenhouse gas emissions. Any energy savings, he said, could take several years to realize, considering the time it takes the fuel savings from a new car to exceed the energy cost used to make it.
John Carney|Aug. 2, 2009, 2:35 PM
Sophisticated people have a hard time understanding popular outrage about the banking bailout. Indeed, the TARP watchdog Neil Barofsky’s complaints that most TARP dollars were used to increase capital cushions and pay bonuses rather than increase lending strikes many as a silly complaint. Of course banks needed to recapitalize themselves before they could start lending, the sophisticates say.
In fact, some people insist on claiming that the purpose was always a recapitalization of the banks.
That might be true. But it certainly was not what the American people were told over and over again. They were told, unequivocally, that the bailout would increase lending.
- When he first explained that the TARP would be used for capital injections, then Treasury Secretary Hank Paulson said the purpose of the program was to get banks to “deploy, not hoard, their capital.”
- When Tim Geithner went before the Senate for his confirmation hearings, he said: “If confirmed, I will carry out the reforms that President Obama and I believe are needed in this program. This program must promote the stability of the financial system and increase lending.”
In response to this the defenders of the bailout tend to make a few very slippery replies. The first response is often to claim that the bailout has increased lending above what it would have been without the bailout. This is a surprising counter-factual and question begging argument for which there is no evidence. The only real reply is: oh yeah, buddy? How do you know what lending levels would have been without the bailout? You cannot simply assume that lending has increased in order to prove that the bailout increased lending.
The second response, recently raised by Derek Thompson at the Atlantic, is that banks would be lending more but the economy isn’t really demanding more lending because we’re in a recession. This has the ring of truth, but it’s only the ring of a half truth. If we didn’t need more bank lending, then why did we bail out the banks for the purpose of increasing bank lending? This response actually undermines the entire public rationale for the bailout.
The reason the public rationale focused on lending was that the policy makers wanted to be able to claims they were attemtping to the economy rather saving banks. That is, they wanted to pretend they were not simply recapitalizing firms that should have been shut down.
Today, the Senate could pass a Food and Drug Administration bill that would grant the agency new authority to regulate tobacco products. Slipped into that bill is a newly introduced amendment that would, for one year, attempt to boost car sales and reduce carbon dioxide emissions:
Sens. Debbie Stabenow, D-Mich., and Sam Brownback, R-Kan., introduced an amendment Tuesday that would set up a program that allows consumers with older, less fuel efficient vehicles to trade in their “clunker” for a voucher worth up to $4,500 toward the purchase of a new car that must get at least 22 miles per gallon or an SUV or pickup that gets at least 18 mpg — clearly a focus on U.S. manufacturers. Buyers of small trucks and SUV’s fare better. If the new vehicle gets at least 2 mpg more than the “clunker,” a $3,500 voucher is issued; for new trucks or SUV’s getting more than 2 mpg, the new car owner gets $4,500.”
On paper, it sounds great. $4,500 for a more fuel-efficient vehicle. Everyone loves more miles to the gallon. But there’s the law of unintended consequences and the cash for clunkers program is no exception.
First, it could very well backfire environmentally. Maybe a few more miles-per-gallon improvement will emit less carbon dioxide per mile, but increased fuel efficiency often leads to more driving and new cars “constitute a miniscule source of overall carbon dioxide emissions.”
Staying on in the issue of environmentalism, the pollution costs of constructing a car could exceed the polluting costs of running a car. One study by “Environment and Forecasting Institute in Heidelberg, Germany, looked at the full impact of a “medium-sized car” driven for 13,000km a year for 10 years. It concluded that the extraction of the raw materials for each car alone produced 25 tonnes of waste and 922m cubic metres of “polluted air”. This compared with 2,040m cubic metres of polluted air for the full life-cycle of the vehicle, meaning that the manufacturing stage was roughly responsible for 45%.” Although refuting studies say the manufacturing is closer to 20 percent of the car’s total emissions, a Carnegie Mellon study found “the manufacturing stage was responsible for 59% of all “toxics” (mercury, etc) released over the car’s full life-cycle.”
Secondly, brand new cars aren’t even a consideration for most consumers. They go straight to the used car market, especially in a recessionary environment. This program would largely distort the used car market in a number of ways. If the idea is to get older cars off the road, the supply of used cars will be reduced at a time when demand has been increasing. Economics 101 suggests this will raise the sticker prices of used cars for people who can barely afford them in the first place. Driving up the cost of older cars may be an intended consequence for policymakers to encourage people to buy new, but it’s a bad deal for consumers.
Again, because the idea is to get older, “inefficient” cars off the road, cash for clunkers distorts the used car part market. In a good Q&A the USA Today about the cash for clunkers program, one question reads, “What will the dealer do with my old car?” The answer: “Gives it to a salvage operator. The engine, transmission and some other parts must be destroyed so they can’t be reused. The idea is to cull fuel-thirsty, polluting drivetrains. Operators can resell other parts, however.”
Back to Econ101. Reduced supply drives up the price of used auto parts and these engines and transmissions would probably be more efficient than the ones sitting in real clunkers at junkyards now.
Third, there’s a cost involved. The estimated cost of the Senate bill is between $3 -4 billion, money that will come from the stimulus bill. But if a similar program in Germany provides any forecast, it will cost more. In Germany’s case the program has become three times more expensive than what they initially budgeted. And intended to stimulate the economy, the program instead simply shifted spending.
Retailers, for instance, say the bonus is shifting spending patterns rather than creating demand. Higher February car sales coincided with falling turnover at consumer electronics stores. Stefan Genth, managing director of the HDE retailers’ federation, slammed the bonus last week, saying it was “sucking out spending” from the retail sector.”
Of all the energy and regulatory provisions out there to reduce carbon dioxide and help the auto industry, this certainly isn’t the worst idea. It’s like breaking one window as opposed to three. But you’re still breaking a window. Let’s call it what it really is: an auto bailout in disguise.
ObamaEcon 101: Chapter I – Clunkernomics
Frequently Asked Questions (FAQ)
We have received numerous emails with questions about what the House and Senate has called the “Cash for Clunkers” bill. The term “Cash for Clunkers” is what America and the news media has used to describe a “credit” program to purchase new fuel efficient cars for the past six months.
The language in Cash for Clunkers bill gave the NHTSA the authority to implement the cash rebate system within 30 days from the bill being signed by the President. The official name for the program is called “Car Allowance Rebate System“ (CARS). The only official website for the program is http://www.cars.gov.
The official rules and conditions for participation in the CARS program are outlined on the official NHTSA website. The information presented on this page is for informational use only based on questions we have received. CARS program rules may change at any time so the http://www.cars.gov is the only definitive source for answers.
This website is created by consumers for consumers who have questions on the CARS program. This is not a government website.
If you don’t qualify and want to sign an online petition to request changes in the wording of the bill if additional funding is needed, visit: http://www.nocashforclunkers.com
We have taken the best questions submitted by consumers around the country and provided answers that we believe reflect the information provided on the CARS website as well as the text of the bill. Consumers will have to validate all answers with their local dealer once the program starts or visit http://www.cars.gov.
Q: Can individuals, corporations or partnerships participate in CARS program?
A: Yes, according to the FINAL RULES:
“The CARS Act uses the term “person” to describe those eligible to purchase or lease a new vehicle under the Program. See Sections 1302(c-d). In the absence of a definition of this term in the CARS Act, the agency relies on the universal definition that appears in 1 U.S.C. 1, which includes corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.
The agency adopts this definition for the term “person” in Section 599.102, and also defines a “purchaser” in that section as a person purchasing or leasing a new vehicle under the CARS program. Of course, each person is subject to the statutory restriction that precludes participation by any person in this program more than once.”
Q: Are there updated conditions on the bill?
A: Here are a few updates we know from the Final Rule published on 7/24/2009:
- The purchased vehicles, which must be new (2008, 2009, 2010 models)
The vehicle can not cost more than $45,000.
The vehicle must be purchase between July 1, 2009 and November 1, 2009 to qualify.
Motorcycles are not part of the trade-in or sales process.
Your clunker has to be in driveable condition.
You must have a clear title to present to the dealer; no liens.
The person on the title of the clunker has to be the same person who is buying the new car. (pg 9)
The EPA mpg ratings on fueleconomy.gov is what is being used; no exceptions
Q: Where can I read a copy of the Final Rules?
Q: How do I find the combined EPA mileage estimates on my old clunker?
A: The NHTSA on July 25, 2009 updated the way in which you can see if your vehicle qualifies. Go to www.cars.gov and click on the “fueleconomy.gov” tab.
Q: Do I have to pre-qualify?
A: No. Your car only has to be qualified for the program. You can check if it qualifies on http://www.fueleconomy.gov. The CARS program does not require consumers to submit their information on the http://www.cars.gov website.
Q: Which dealers will be participating in the Car Allowance Rebate System (CARS)?
A: Most new cars dealers in the USA will participate. They will have to register with the NHTSA starting on July 24, 2009. Registered dealers will be eventually listed on http://www.cars.gov.
Q: How will the government limit fraud with CARS transactions?
A: The NHTSA is taking full compliance with program rules seriously. Car dealers will first have to register at http://www.cars.gov and be authenticated for the new car brands that they sell. Dealers will be responsible for following all guidelines set by the NHTSA and severe penalties will be issued for anyone who is committing fraud during the trade-in process or during the salvage process.
Q: What do I need to bring to the new car dealership when I bring in my trade?
A: You should bring documentation establishing the identity of the person who currently owns the vehicle, preferably the title of the vehicle, and documentary proof that the vehicle “has been continuously insured consistent with the applicable State law and registered to the same owner for a period of not less than 1 year immediately prior to the trade-in.” The final rule will specify what types of documentation would be acceptable.
Q: Does the Cash for Clunkers bill apply to used car purchases?
A: Currently, the language of the proposed bill is only for new car purchases.
Q: Is the value of the voucher tax-free to the consumer?
A: Yes. The CARS Act expressly provides that the credit is not income for the consumer. However, the credit will be considered as income for the dealer.
Q: Is there an income limit that disqualifies certain vehicle owners?
Q: If I already purchased a new car, in the last few months, can the voucher apply to my past purchase?
A: No. Car purchases made prior to the official start date will not qualify.
Q: If my car is worth more than $4,500, how would the Cash for Clunker credit work?
A: The program would not provide any benefit if a car dealer would give you more than $4,500 for your trade-in. If you want to purchase a new car, do not wait on this bill if your trade is worth more than $4,500 since it will not provide any upside relief.
Q: If dealers are offering cash incentives toward a new car purchase, would that be in addition to this credit?
A: The CARS credit is independent from manufacturer buying incentives. For example, if a car dealer is offering $3,000 off the list price of a car and you qualified for a $4,500 CARS credit from your trade-in, then the total reduction off the MSRP would be $7,500. You should always shop for the best deals before buying a car.
Q: I have a car that qualifies for the cash for clunkers rebate but I still owe money on the title. Will this still work with the rebate? Can the cash rebate help pay off the title when I trade it in for a new purchase? It is registered and insured of course. I would like to get out from under this car loan and get a car with better gas mileage as required.
A: Right now the NHTSA is saying that the TITLE has to be clear of any liens. So if you owe less than what you will get for your clunkers trade in, you may want to consider paying off the lien and getting a clear title.
Q: I have two old clunkers, can I trade-in both cars for a $9,000 credit toward a new car purchase?
A: The current wording of the bill would seem to indicate that only one CARS credit can be applied to a new car purchase.
Q: How do I know if my car qualifies for a $3,500 or a $4,500 CARS credit?
A: Click on this link to get your EPA mileage estimates from the Federal website: Click on this link: http://www.fueleconomy.gov. If you car gets a combined miles per gallon of 18 mpg or less, you can qualify as long as the car is not more than 25 years old. Your CARS credit amount would then be determined by the new car you purchase. Trucks have different rules.
Q: How do I find a CARS Participating Dealer?
A: Once the registration process is established for car dealers, the official list will be posted on http://www.cars.gov. Most dealers in your area should be participating that sell new cars. You can call any dealer yourself.
If your clunker qualifies and you want to purchase a new car, complete the form on the left. We will have a local dealer in your state contact you and get all your trade-in information validated.
Q: What years constitute a “new” vehicle that qualifies for CARS credit?
A: According to the CFC Bill PDF, on page 7 item number 5B, vehicles of model year 2008 or later qualify. In most states that also means that the car was never previously titled.
Q: Can I go to the junkyard and buy an old car and use it for a trade?
A: You have to have owned the car for a year and show continuous registration and insurance for the clunker you trade in. Any recent car purchases, trades or transfers would not qualify.
Q: What will happen to the car I trade in?
A: The car will be sent to the salvage yard. Some parts may be kept but the engine and drive-train must be destroyed. Specifically the engine will be injected with a liquid glass solution to permanently disable the engine and it will be the responsibility of the dealer to make sure this is done to the engine.
Q: My car is old and originally was rated a 21 mpg, but now it gets 14 mpg. Will it qualify?
A: The program is based on the “combined” mpg estimates, a number in red, found on this link: http://www.fueleconomy.gov. If the number for your “car” is 18 mpg or less, you can qualify if you meet all the other conditions.
Q: How long will the program last?
A: Right now the CFC program will most likely run from July 24th through November 1, 2009. There is no guarantee that the program will not run out of money sooner. We predict that without additional funding, the program will be out of money by September.
Q: Are there restrictions on the year of my trade-in.
A: The car can not be more than 25 years old.
Q: Why would some trades qualify for $3,500 and other trades get $4,500?
A: The difference in vouchers depends on the improved gas mileage of your new car compared to your trade. For example, if your new car purchase gets 4 mpg more than your trade you get a $3,500 credit. If the new car gets 10 mpg better than your trade you get $4,500 credit.
Q: What if my trade-in is worth more than $4,500?
A: This program does not apply to you because you will be better off trading the car in through traditional channels. All cars that are part of the CARS program will be sent to the scrapyard.
Q: I have an old clunker truck that gets under 18 mpg. Can I trade that in for a car that gets over 22 MPG?
A: It would seem that you will be able to trade it in. We will wait on the final wording on the bill since this is a very popular question.
Q: My parents own an old clunker. Can I transfer the title into my name and use it for a Cash for Clunkers trade-in?
A: According to Page 9 of the final rule published on July 24, 2009:
“Questions have arisen as to which persons are eligible to participate in the program and whether a person can trade in a vehicle owned by someone else, such as a family member. The agency has concluded that individuals as well as legal entities, such as corporations and partnerships, may participate in the program. However, a person may not trade in a vehicle owned by someone else under the program. The Act’s one-year insurance requirement is satisfied so lon g as the trade-in vehicle is insured, irrespective of the identity of the person holding the insurance policy. The specifics of these requirements are explained later in this document. “
Q: Can I buy any new car and still qualify? Does it have to be an American manufacturer?
A: You can buy any new car: foreign or domestic.
Q: Can I lease a car or do I have to purchase/finance it?
A: Qualifying leases must be at least 5 years long. You can finance the car under any term you qualify for.
Q: Do you have to have good really good credit? If so, what does your credit score need to be in order to qualify ?
A: The CARS program is not linked to any credit approval process. You will have to qualify for a new car purchase based on your personal credit and the bank loan requirements at the dealer you visit. The CARS credit acts like a cash down payment. The rest of the approval process is between you and the new car dealer.
Q: How can I find out the current EPA MPG estimates for the car I drive?
A: Visit: http://www.fueleconomy.gov
All questions and answers are subject to a final determination by your local car dealer. LuckyBogey’s Blog cannot provide definitive answers on the CARS program. If you have any questions that will impact your purchasing decision, please contact the American government or a local participating car dealer.
(Due to the emotional attachment of our Clunkers, No Pictures/Videos showing the Killing of Clunkers are to be posted on this Blog Site.)
Please see to the following You Tube Video with graphic detail on the Killing Process of a Volvo!
HotAir (Green Room): Cash for clunkers is Obamanomics in microcosm
Washington Post: When the Clunker Is Greener
The Hill: DeMint: ‘Shazam, we’ve sold some cars!’
Yahoo (via AP): Dem, GOP leaders say Senate will vote on clunkers
Dick Morris: CASH FOR CLUNKERS: TRADE IN AMERICAN; BUY FOREIGN
Updates: Corrected Dealership Payment Receipt Info/Added Related Links