How does 'cash for clunkers' work?

August 10, 2009 7:44:59 AM PDT
Eyewitness News has been following the "cash for clunkers" bill on Capitol Hill that passed Thursday. All that remains now is President Obama's signature and a few final details. [INTERACTIVE: Take a look at how the CARS program works]

There are still a few things that need to be worked out before the voucher program begins. It will take at least another month before the first vouchers are issued, but we do know the kinds of cars that will be included.

If your car was built in 1984 or after, the cash for clunker program can help you replace your old car for a new one. Here's how the program will work:

  • Passenger car owners can receive a voucher worth $3,500 if they trade in a passenger car getting 18 miles per gallon or less for a new car getting at least 22 miles per gallon.
  • Owners of SUVs, trucks, or minivans that get 18 miles per gallon or less can also receive a voucher for $3,500 if their new SUV, truck or minivan gets at least 2 miles per gallon more than their old vehicle.

However, you can get even more money if you buy a more fuel efficient vehicle:

  • Car owners can get a $4,500 voucher if they trade in a car that gets 18 miles per gallon or less for a vehicle that gets at least 10 miles more per gallon.
  • SUV, truck and minivan owners would also qualify for $4,500 vouchers if they trade in a vehicle that gets 18 miles per gallon for a vehicle that gets 5 miles more per gallon.
Car dealerships will be able to access electronic vouchers from the government for consumers who buy or lease a new car and the dealers would have to ensure the traded in vehicles are destroyed.

Drivers we spoke with are split over the program.

"Oh yeah, definitely if they can get money back for an old car they are driving, yeah," said B.J. Sprague.

"It sounds good, like most of the things our federal government puts out, but I don't think it will hold much water at all," said John Beadle.

For mechanics, taking older cars off the road could have an impact on business, but repairmen we spoke with do not seem overly concerned.

"I really don't think in reality that is it going to make much of a difference," said mechanic John Poutous.

Don't think you can rush down to buy a clunker in order to get the voucher though. The car being traded in must have been continuously insured and registered to the same owner for at least a full year. And the new vehicle you buy cannot be worth more than $45,000.

We are told the vouchers should be made available in August and the program will run through November of this year.

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