Clunker Law: What You Need to Know

We found out today that the EPA, over the weekend, changed the MPG ratings of many cars and trucks sold in the years which would make them eligible for the so-called "clunker program" (vehicles not more than 25 years old).

The result is a hodge-podge of new ratings, but, most importantly, some cars and trucks you thought were on the list are now off -- and some of you might have checked last week and saw that your cars were ineligible, but as of this week they are eligible...Washington giveth and taketh away, but much more quickly than in biblical days.

Check the (current) status of your car at www.cars.gov, and if you're interested in the program and your vehicle is now eligible, get down to a new car dealer fast, before DC steps in again to "help" or "clarify." If your car or truck was eligible and now is not, write your congressperson, and see if you get a reply before the program ends.

This is very important -- every new car dealer, import or domestic, is participating in the clunker program. There are no "official" or "sanctioned" dealers: all new-car dealers can help you with your trade-in and voucher. Some car companies can just afford more advertising than others -- hence the confusion, where some car-makers infer their dealers are "clunker specialists," as if they have more experience or training in dealing with this brand-new program, explained by a 136-page law. The truth is, it's new to everyone involved, and dealers are handling it as best they can.

The program is funded with only $1 billion and is slated to be in-effect for just four months. That's not a lot of time, and, especially, not a lot of money. I don't think there's much doubt the program will run out of money before it runs out of time. Again: if your car or truck is eligible and you want to participate in the program, don't wait any longer than you must to get to a new car store and make a deal.

Your trade-in clunker will indeed be crushed; it's not going to show-up at some wholesale auction (if it does, your dealer will face federal charges -- though I'm sure we'll see one or two cases of this happening). So be sure you want to participate in the program before you go shopping and make a deal. This isn't a situation where you trade-in your old car for a new one, have problems with or just don't like the new one, and think you might be able to get your trade-in back from the dealer. Nope, once you trade it in and it's a clunker, it's gone, forever.

What's the bottom line? A pretty good one for customers, meaning a voucher for either $3,500 or $4,500 depending on the year and mileage of your trade-in clunker compared to your new car or truck.

Chrysler seems to be running the most aggressive, customer-friendly campaign for this program, promising to match the government voucher with their own, equal discount in addition to whatever rebates and discounts were already in effect for that model. Worth checking out, at the least.

Ford and Toyota are also, not surprisingly, forceful with their clunker program promotions; they both have advertising dollars to spend (heck, Ford even showed a profit this past quarter...not enough to get them out of the hole they're in, but if things continue in that direction, by the end of 2010 they could be truly profitable and paying a dividend).

Finally, understand that even if your car or truck is an eligible clunker under the latest NHTSA and EPA rulings (and these could change on a daily basis), you won't get the voucher unless the new car you're buying is rated as getting a certain MPG above your clunker. So, don't think trading-in your 1993 high-mileage Honda Civic on a 2009 Cadillac Escalade is going to get you that $3,500 or $4,500 government pay-out. It ain't.

Be careful, follow the rules, check www.cars.gov before you start new-car shopping, study the advertising and see which dealers are matching the voucher amount or giving other special incentives and go out there and do your best -- you're helping the environment, but most of all, helping the beleaguered auto industry. Trust me: they appreciate your business more than ever.

Follow Steve Parker on Twitter: www.twitter.com/autojourno

Comments

[Cars4Charities]

My problem with cash for clunkers is that the running vehicles being turned in are destroyed. Why not donate these cars to charity. Those that are in good shape could be given to needy people so they they can have transportation to and from work. Those that are in poor shape could be scrapped with the proceeds going to help fund the mission of the charity.
www.cars4charities.orges.org

[TonyP4]

A Nation of No Losers

We do not let you be a loser!
Your mistakes will be rewarded handsomely.

When you bought a clunker that you should not have, we give you $4,000.
When you bought a mansion that you cannot afford, we're going to bail you out.

When you lost your job, we extend your benefit.

When you do not have saving, we give you free health care.
When you have saving or a job, we take away your health care.

Teenagers, the more babies you have, the more benefits you have.
Drunk drivers, no one will prosecute you as the entire jury are drunk.
Fatsos, do not worry as our up-coming drugs will melt all your fat while you sleep.

All athletes are rewarded with millions for taking drugs.
We voice loudly and disapprovingly on foreign athletes doing same.
It is an America invention!

When you cheated billions, you can retire in a resort-like 'prison'.
Also, all the billions your wife hid is hers.

No other country lets their citizens own guns.
NRA and his puppet politicians will give you millions of funny 'reasons'.

When your company fails, we bail it out.
The executives are rewarded with bailout money for bringing down a company.

[GTRich2004]

I like this part in the FAQ:
In addition to this credit, will I get the full value of my trade-in vehicle?

No. The law requires your trade-in vehicle to be destroyed. Therefore, the value you negotiate with the dealer for your trade-in vehicle is not likely to exceed its scrap value. The law requires the dealer to disclose to you an estimate of the scrap value of your trade-in vehicle

I have no idea what scrap value is for a car/truck, but I wonder how many people would actually get more money by just trading in their car.

[Steve Parker - Huffpost Blogger]

Thanks for the comment. Good point, but all they need to do is ask the dealer ... or better yet, do a reasonable amount of research before they visit a dealer. KBB.COM (Kelly Blue Book) is the standard for new and used car values ... easy to find and easy (and free) to use.
Steve

[cinnysmom]

I think if you qualify for this program it can be a good thing. Getting some of these "clunkers" off the highway will save money in the long run. I hope this program is a success, not only for us the consumers, but the struggling automakers as well.

[Steve Parker - Huffpost Blogger]

It's one way to do it. Japan has a different method. Each car must undergo a rigorous and expensive annual inspection. Scratches on a car, a missing wheel cover, a small crack in a windshield --- all these things (and many others) are counted as safety defects and must be repaired for the car to be able to use the road.
"Oh," you're saying, "that's why when I was in Japan I noticed every car and truck looked to be in perfect condition.­"
The combination of the onerous inspection and the high cost of repairs is an encouragement to the Japanese to support that country''s #1 manufacturing and export business ... car-making ... and buy a new car!
Many of the 'clunkers' which the owners traded-in make their way to southeast Asia where they live out their lives as used cars ...
Steve

[KillTheMessenger]

The current status of my car is that it gets 49.4mpg. Hybrids always do a little better in summer... I think it's the viscosity of the oil that makes the difference. But inflating the tires a little more helped a lot, too.

:-)

[Steve Parker - Huffpost Blogger]

Maybe in another 20 years your car will be considered a 'clunker' and you'll trade it in for an EV of some sort ...
Steve

[WIpatriot]

Gee, you wouldn't have a Prius, now, would you?

[Steve Parker - Huffpost Blogger]

Don't know about the poster, but we have a Prius -- first-generation car; only thing which ever went wrong with it was some problem with the cassette deck (and Toyota fixed that).
We had to stand in line for some six months to get the car; no special treatment given journos.
In 1985 I drove some of the first Honda hybrids at a test track in Japan. Seeing the effort which Honda was putting into these cars (certainly not unexpected) and knowing Toyota would do the same, we felt comfortable buying the first-year car, and have yet to regret our decision.
Steve

[sheila]

Unanswered questions:

do YOU have to own the clunker or can the owner be your, say, live-in boyfriend, who comes with you to the car dealership and hands over the pink slip?

is a stack of registration cards for the past few years enough to prove the registered/insured requirement, since you must have insurance to register, or do you have to prove insurance separately?

Thanks to anyone who knows, since this info is not on any of the websites.

[Steve Parker - Huffpost Blogger]

Good questions!
As I understand it ...
You have to turn-in the pink slip when you turn-in the car ... so whoever owns it has to sign the vehicle over to the dealer.
You'll need to prove you paid the registration and had insurance for the past one year.
Steve