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Is 'Cash For Clunkers' Out Of Gas?

For those that are regular readers of my blog, you know that I wrote an overview on the “Cash For Clunkers” Program a few weeks back.  The program has turned into somewhat of a nightmare and a political football at the same time.  Today, I will address the latest on the program and share with you some concerns and warnings for those that are considering participating.


The program was initially funded with $1 billion. In anticipation of the program becoming available, dealers around the country were making deals with customers even though the official approval of the government rebate program did not occur until the last week of July. Since dealers did not know the complete rules and restrictions, there are now plenty of cases where individuals had to return cars after learning that they would not qualify for the rebate. Where things stand today is that the program ran out of money in less than one week. Nonetheless, the White House has all but promised that the program would be continued. The House of Representatives approved an additional $2 billion of funding but it is uncertain whether or not the Senate will go along with this. As a result, we have quite a mixed message coming out of Washington. On the one hand, consumers are being told to not worry about the fact that the program has run out of money. On the other hand, there is no assurance of the program being funded. As a result, Christian is advising its readers to not enter into any purchase transactions with the expectation of the government rebate until after the Senate votes on additional funding.


As with all government programs, there seems to be countless stories of confusion and red tape surrounding Cash For Clunkers.  One dealer described the process of collecting the government rebate as taking more than six hours of paperwork. There are thousands of car dealers around the country that are collectively owed more than $1 billion in rebate money. No one really knows how long it will take for them to get this money or what additional red tape and bureaucracy they will have to go through. One can only imagine getting a phone call a few months later and being told that they owe the dealer $4,500 since the government did not honor the rebate.  The confusion has become so frustrating, that one lady at Senator Arlen Specter’s recent town hall meeting asked how we can trust the government to run healthcare when they can't even run Cash For Clunkers.

The bottom line for all consumers to remember is that in the end it will likely be your responsibility if a dealer does not receive the rebate for your trade-in. This is why we are especially uncomfortable at this time recommending that anyone move forward until we know that the Senate has approved the additional $2 billion. Even with that approval, we would all still have to admit that there is some level of risk on counting on a government program with as rocky a track record as this one. Before taking a dealer's word for it, read my prior article (linked above) to make sure that your vehicle does qualify for the rebate program. This is one case where ‘let the buyer beware’ is an understatement.  As in the video above, we are hearing stories of people being required to sign a financial guarantee that makes them 100% responsible if the dealer does not receive the government rebate for their trade-in.

Cash For Clunkers Links:

Cars.Gov (official government site)

Eligible Vehicle List From Edmunds

Best Overall Description of Rules  (From Kelley Blue Book)

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James L. Paris
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