In late June 2009, Congress passed the Cash for Clunkers stimulus bill. This program, which is an effort to help the failing car industry, gives car owners a stimulus incentive voucher if they trade in their present car for one that is more environmentally-conscious.It offers a nice savings trimmed off the purchase or lease of a new car, while also giving a boost to car dealers looking for increased sales. The automotive industry has been in a slump during the economic downturn and this new program just might be the necessary jumpstart it needs.

The bill signed by President Obama is officially called C.A.R.S, which stands for "Consumer Assistance to Recycle and Save Program ". It comes from Title XIII of Bill H.R. 2346 passed in Congress.

Title XIII of Bill H.R. 2346 is the Consumer Assistance to Recycle and Save Act of 2009.  This section of the bill outlines the provisions, qualifications and requirements for the "Cash for Clunkers" stimulus program.  It gives authority to dealerships to accept cars under the bill's provisions as trade in for vouchers, and requires that dealerships must surrender the used vehicles to an appropriate entity for disposal.  The Secretary of Treasury and Inspector General of the Department of Transportation also have roles in the process to get electronic payments to the dealers and prevent any potential fraud.

This program allows a present car owner to get a $3,500 to $4,500 voucher for trading in their "clunker" car for a new fuel-efficient car. These vouchers are only used for purchase or lease of a new car with improved gas mileage.. To qualify a car owner's present vehicle must get less than 18 miles per gallon in terms of fuel efficiency. If the individual buys a car that gives a 10 mile per gallon improvement, they will qualify for the full $4,500 voucher. Car owners who get a car with a 4 mile per gallon fuel improvement qualify for $3,500 vouchers.

Back on June 25th, 2009 a Cash for Clunkers Honda press release was issued.  In the statement, the Honda car company stated that nearly every car they manufacture would help customers qualify for the program.  These cars include their 2009 models of the Fit, Insight, Accord and Honda Civic, which each have fuel-economy ratings of 22 miles per gallon or more.

Some automotive manufacturers such as Dodge Chrysler Jeep have not only jumped on board with this new plan, but are also offering up to an additional $4,500 cash allowance to provide more savings to prospective customers. This is in addition to the $4,500 cash for clunkers voucher given, making for double the savings on a new car. A recent cash for clunkers Chrysler commercial states that the $3500 to $4500 cash allowance is available to all customers regardless of whether they are trading in a car.

There's several cash for clunkers rules and requirements to be familiar with.  To qualify for a Cash for Clunkers voucher, the vehicle must be less than 25 years old and get 18 miles or less per gallon in terms of fuel efficiency. Certain very large pick-up trucks and cargo vans must get 15 mpg.

There is no sign-up or enrollment procedure for this program, as franchised automotive dealers will apply the credit towards your new car purchase, which will reduce the price you pay for the new lease or purchase. This credit will only work towards purchase or lease of new vehicles.

The National Highway Traffic Safety Administration (NHTSA) issues the credit after the dealership has sent them the necessary paperwork. Generally, NHTSA should issue the financial credit to the dealership about 10 days later if all requirements are met.

If a lease is the chosen method to acquire the new vehicle, then the lease must be for five years. The program's rules state " You cannot get credit for a vehicle that costs over $45,000". It's also important to note that the trade-in vehicles must be registered and insured in the buyer's name for the full year prior to the trade-in, to qualify for a voucher. Also, the "clunkers" must be in drivable condition at the time of the trade-in.

It's important to make sure you have everything you need (as required by CARS) before heading to the dealer and signing off on a new vehicle lease or purchase.  You'll need proof that your used car ("the clunker") has been registered and insured under your name for at least a full year prior to the trade-in. You'll also need a title that is free of liens or other issues. If there are liens against the title, it is highly recommended that you get these cleared up before arriving to the dealership for purchase or lease of the new car. Once you have all of these things in order, you'll also need to make sure there is adequate proof that the clunker car is under 25 years in age. If you fail to meet any of these requirements you more than likely will not qualify for Cash for Clunkers.

If you do qualify, once you make the lease or purchase of your new car official, the dealer will handle the rest of the paperwork. The dealer will forward the paperwork to the appropriate office and NHTSA will check over things to make sure your requirements have been met. Then, in approximately 10 days afterwards, NHTSA will issue the appropriate finance credit to the dealership. It will then be applied towards your new car purchase or lease.

One intention of this program is to jumpstart new car sales for the failing auto industry.  The other major intention of the Cash for Clunkers stimulus program is to replace older less-fuel efficient cars with newer more "green" models.  The government has a total of $1 billion in rebates alloted for the program.  The program is set to last until November 1, 2009, or until the rebate funds have been exhausted, whichever may happen first. 

Cash for Clunkers program was suspended as of July 30th due to the fact it was too successful.  The government estimated the funds were being depleted faster than originally expected.  It seems a lot of people were cashing in on the vouchers to get one of the new cash for clunkers qualifying cars!

As of Friday July 31, 2009, the House has approved another $2 billion in funds for the Cash for Clunkers or Car Allowance Rebate System (CARS). This comes due to the fact that the originally intended funding of 1 billion dollars was expended so quickly in the first week of the program. Many dealerships are reporting high volumes of business, to the point their websites have been flooded with traffic and in some cases have crashed. So far the Clunkers program is a resounding success, but there's no telling how long it will last for with this new funding. Make sure to find out the appropriate cash for clunkers requirements so that you can participate in this next go round.