Trade In Your Clunker, Get $4,500. Maybe.
The government is offering a $4,500 credit to anyone willing to trade in their old clunker for a new fuel efficient car, but there's a catch. Well, several catches...
To qualify, consumers must turn in a vehicle that is no more than 25 years old and has a combined city and highway fuel economy rating of no more than 18 miles per gallon, as calculated by the Environmental Protection Agency. The E.P.A. lists vehicles' ratings at the Web site FuelEconomy.gov.
The old vehicle must be drivable, and it must have been insured by and registered to the same person for at least the last year, preventing shoppers from buying an old car and flipping it to get a discount on a new vehicle. The credit cannot be applied toward a used vehicle or toward new vehicles that cost more than $45,000.
To get the full $4,500 credit, consumers must buy either a new truck or sport utility vehicle that is rated at least five miles per gallon higher than the scrapped vehicle or a passenger car that is rated at least 10 miles per gallon higher than the scrapped vehicle. Because the old vehicle will be destroyed, the credit is given instead of the regular trade-in value - not in addition to it - though some dealers might compensate customers for the vehicle's scrap value.
By contrast, programs in Europe practically boast "if you can haul it in, you get cash!"
According to one Texas dealer, a similarly restrictive state program helped sell only about an extra car each month. And, of course, domestic automakers manufacture only 8 of the 48 cars Consumer Reports recommends that are eligible under the program. Still, do you have an old jalopy you would consider dragging in for the credit?
Rules May Limit Cash for Clunkers Program [The New York Times]
(Photo: The Consumerist)
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Comments:
All of the "catches" make sense for a variety of reasons. Honestly, I'd rather the program were complex than open to abuse.
If it were abused, then we'd just be reading an article about how it should have been better defined instead of it having too many conditions.
The inability to trade the car in for a more reliable, gas efficient used car is just plain stupid. Wouldn't a nice used car actually be better for the environment, keeping it out of the dump?
No thanks. I prefer not having car payments.
I feel that too many people might run out and buy a new car they maybe cant afford just to take advantage of the 'savings'.
yeah, but they have to get *somebody* to buy all the new GM and Chrysler cars that are sitting on lots all over the country because no one wants them.
They can't just lower the price of the cars to accurately reflect their value to the American public, because then, they would never be able to get the price back up again. So they're doing this trade-your-piece-of-shit-for-a-new-piece-of-shit plan to try and get *somebody* to buy the crap cars that no one wants so the people who work for Chrysler and GM can still have jobs.
The whole thing is really messed up.
the majority of the hondas, toyotas, and nissans on that list are made in america. on the other hand, some of the GM cars on that list are made abroad.
@TheUncleBob: It's a subsidy to GM/Toyota/Honda/Ford/etc., the whole point is to get people to buy new cars.
And even though it's only GM and Chrysler that have gone bankrupt, the entire industry is way the heck down in sales. Even Toyota is posting net losses.
Not defending it; just stating what the so-called reasoning is.
I have a 1998 Ford Ranger with 237K miles that may be headed off thanks to this. The only issue is that I've really kept it maintained through the years, so it's in generally decent condition (although it's destined for about $400 in front end repairs in the next two months, and I've spent around $1900 over the past year on repairs). My only issue is that I'd like to keep a truck, so with a starting MPG of 17, I'd have to get at least 22 to max the credit, which ... let's just say trucks aren't all that efficient. The Tacoma with the four cylinder and manual gets 22, and that's about the only one I've found with a larger cab. Oh well, we'll see. Maybe break down and buy a Prius...
What does "drivable" mean? Moves under its own power? Legally drivable? Has all its original parts?
More signs of Obama Fascism
What car you can or can't buy!!!
W
WAKE UP SHEEPLE
Steve, you can buy any car you want, this plan only limits which cars the government will assist you in trading up to.
If you want a Bugatti Veryon, go ahead and buy a Veryon, the government isn't saying you can't...
"To get the full $4,500 credit, consumers must buy either a new truck or sport utility vehicle..."
I believe The Consumerist text above is incorrect. You can buy a new passenger car and get the full $4,500 if the new car is 10MPG better than the trade in (see link below).
@balthisar: Then don't call it "Cash for Clunkers" - call it something like "We just blew crap loads of taxpayer money on two companies that are about to be worthless, help us throw more taxpayer money at them." I guess that's not as catchy though...
Wait a minute...the cars will be scrapped? Am I the only that thinks that might not be the best idea?
Last year, Wired had an article arguing that trading in your car for a more fuel efficient car was actually bad for the environment, since it takes a huge amount of energy and raw material to make a new car. I suspect that on net, this bill will actually be worse for the environment (if people actually use it).
The other objection I have is that takes a bunch of running, cheap used cars - you know, the kind of cars that poor and young people buy - off the market, thus raising the price of used cars. And car ownership often lets people do things like get better jobs further away from their homes.
It's well known that EPA estimated mileage rates are a bit high (ask anyone who's purchased a hybrid!). For my car, it says the combined EPA rate is 21 mpg and I've never gotten more than 17 based on my own calculations.
Why is it that people who have bought fuel efficient and environmentally friendly cars over the years are being punished, while those that have been more careless about such issues are being rewarded?
@heart.shaped.rock: It's incredibly low, not high. I get an average of about 30mpg (33 highway, 26-27 city) on a car that's rated at 24 combined.
Well, it's not going to happen. No one can afford the new cars right now!
What are they thinking!?
@CaptainSemantics: the point of scrapping them is to keep the clunkers off the road... the point of the program is [supposedly] to increase the overall fuel efficiency and reduce the emissions of all the cars on the road today. A convenient side effect of this program is encouraging people to buy a new car when they otherwise wouldn't [not saying that it's a particularly bad side effect]
@CaptainSemantics: It is to keep the old, less fuel efficent cars off the road ( doesn't really make sense for the gov to pay you to get rid of it, if it will still be driven by someone else.) It is also to keep from having a glut of used cars on the market, which would lower demands and prices on them.
@Hawk07: Although I agree that I wish this would help me replace my 16 year old accord, environmental concerns effect us all. If you buy that this will clean the air, it is cleaning the air you breath too. Unfortunately, if you are one who believes the process of making the new car and disposing of the old leaves us worse off, we are all worse off.
@heart.shaped.rock: The EPA city rating has been spot on for me and I get little bit better than their highway rating. Don't look at "combined" as it depends entirely on your city/highway ratio.
yay 91 Chrysler New Yorker, get 19 mpg according to the EPA but it hardly gets 16.
My 25-year-old crapbox gets a fair amount worse MPG these days, but it won't qualify because its MPG when new was rated over 18.
@SlappyWhite: I completely agree. $45,000??? What are they thinking? The most I've ever spent on a car is $8,000, and that was a *nice* used car for my wife that she loves.
Seriously, I can't believe this amount is normal for some people. That's half what our condo is worth.
@calchip: Funny, that's basically where real estate is stuck. Everyone besides banks have to acknowledge mark-to-market, so when people begin to realize how many of their former needs are nonsense, values tank.
I'd cry but I have to save my tears for those in SoCal.
@heart.shaped.rock: I always get *more* than the EPA rating even when driving in moderately populated areas.
Learning to drive more efficiently helps a lot. If ever driver in the US increased driving efficiency by 2 MPG (not a lot, really), we'd save *billions* of barrels of oil every year (I did the calculations once).
Things like air in your tires, not accelerating into a stop sign, using gears properly (in a standard transmission), and driving the speed limits all contribute to conserving fuel.
For instance, on the highway every 5 MPH over 60 you drive increases the cost of gas by $.24 per gallon.
@GuinevereRucker: PS I may be off with the billions thing above, but I remember it being a lot of gas saved :)
The 3.3L version of my car qualifies as a clunker. The 3.1L does not. Which do I have? The 3.1. Ugh! The car is still crappy as hell.
I traded it in anyway and got a Prius.
@GuinevereRucker: Might want to clarify-every 5 MPH over 60 increases the effective cost of gad by $0.24. There's not a clerk out by the pumps with a radar gun. :)
@CaptainSemantics: well, if the care can be sold for more than $4,500, it won't be traded in with this program. If the government were to sell it for less than $4,500, the next person could come along and do the same thing (albeit a year later), and the cycle continues. This is a program where they can't make money and at the $4,500 level, the costs of administrating the program will make the potential savings miniscule in comparison anyway.
@TheUncleBob: But it's not just GM and Chrysler cars that are eligible. Like I said, it's for the entire industry.
@GuinevereRucker: "For instance, on the highway every 5 MPH over 60 you drive increases the cost of gas by $.24 per gallon."
Maybe, but if you are travelling cross country the difference between 60 and 70mph can mean an extra night (& expense) on the road.
@HogwartsAlum: I see your point, but in objective terms, the vast majority of people really, really can afford new cars right now. Year over year sales are down to about 80% levels, meaning only 20% fewer people are buying cars. If you accept the 10% unemployment figure as okay (underemployment, etc not factored in), then fully 1/2 (10%) of the sales are people that are holding their cards, and choosing not to buy (like me, for example). This is highly simplified, of course.
Why does a 20% drop kill a car company? Can't they survive on the remaining 80%? In the long term, none of them can (killed off GM and Chrysler). Cars are research and capital intensive. You can't add another 16GB of memory in the course of three months and have a hot new seller. If overall operating margins given huge fixed costs are only 10%, and you lose 20% of your business, then the result is obvious.
@Hawk07: Incentivicing one thing does not equate to a punishment to those who don't get it. Why must you erroneously conflate the two? In what way are you worse off than yesterday with your fuel-efficient car, now that this legislation/program exists?
@K-Bo: To be fair, the environmental impact of manufacturing a car, sourcing all those materials, assembling them, transporting it across the globe to the buyer, is immense. In 2004, Toyota calculated that 28% of a car's lifetime emissions can come from the manufacture and transportation of it. And this is some really touchy math because the newer and more efficient a car is, the larger % of its fuel efficiency is tied up in manufacturing.
So if you consider a new fuel-efficient car over an old one, if its emissions (which, IIRC, is not exactly the same as fuel efficiency) is less than 28% better than the previous car, there should be no advantage to having traded in for a better car in terms of carbon footprint.
I have a Chrysler Town and Country that (supposedly) gets 18 mpg. Since I need to tow a trailer occasionally, I can't get the $4,500 for a 28 mpg car, but I can get $3500 for a 22 mpg vehicle. My van's blue book trade in value is far less than the $3500, so this, along with the sales tax deduction will be a good deal for me.
I have a car that qualifies - and I *might* take advantage of this. The only problem, though, is that even after the discount it would be definitely cheaper to buy a nice, fuel-efficient used car. I wish they would have included used cars from like 2007 forward.
There's no way I'll get financing, so it's all about whether I can scrape the funds together to do this. If I do, it'll be for a Corrolla or a Fit - but I have an AWD now, so I'm a little nervous about trying to navigate the terrain around where I live with a FWD car.
Our car qualifies, but a new car doesn't qualify for our budget. Had they allowed the credit for used cars, this would have been tremendously helpful. We'll keep our gas guzzler, it will be much cheaper than buying even the cheapest brand new car that would qualify.
@WTRickman: look at the Toyota Tacoma. I have an 06 model and I love the engine. Its a 4.0 liter V6 and I swear it gets about 20mpg on average if you're not dogging it. I put about 16 gallons to fill it up (even though toyota says it has a 21 gallong tank!?!) and can get 325 miles from that tank. All in all, I'm happy with the mpg's after moving from an I4 Altima.
@madanthony:
Your second paragraph deserves a +1 for insightful. Although, I would argue that this bill *could* technically do that, but in reality it won't have any impact whatsoever. The only people who would take advantage of this are people who are currently driving cars worth less than $4500. These people, like myself, are not in the market for a brand new car, just a better used car.
@ShariC:
Yeah, the catches all make sense, but all together they make the program a lot less effective. If they allowed the purchase of USED cars I think the program would be a lot more effective at getting inefficient cars off the road. But it wouldn't help automakers very much. Problem is, the people who have cars that are worth so little that this program would benefit them are not the kind of people who would buy a brand new car.
@TheUncleBob: They don't afford to make the used cars lot owners too mad; this way, they still get some inventory.
My husband and I bought our new car last August with the Clean Air Texas program. It was great for us because our poor ole 1990 Honda civic was barely holding itself together. The extra 3000 dollars combined with our down payment made the monthly payments low enough for us to afford.
We ended up with a new Scion xB, and we love it!
My 1993 Jeep Grand Cherokee is going to be history as soon as they get the rules and participating dealers worked out.
I have been driving this thing to get the last gasps of life out of it, started to think about doing something last summer but then was feeling nervous and pushed on through another winter. I figured this summer was definitely going to be the end of the road for this baby --- great timing for me. The trick is whether I want to push on for the $4500 needing 5 mpg better or accept $3500 for 2
Doesn't matter my old 94 Cavalier exceeds their "combined" 18 miles per gallon, it is shown as 23. I wonder how many don't qualify just because they are just a little bit more even though everything else checks out.
I've got an old 1989 Ford F-150 I've considered entering in this program. Maybe I could get a small v6 truck that gets 20-25 miles per gallon or so.