A military spending bill that includes Cash for Clunkers passed Congress June 18, 2009 and now heads to President Barrack Obama for approval. The legislation is meant to remove gas guzzlers off the road that will help the environment.
The Texas Independent Automotive Association’s belief is that the $1 billion targeted for this program is well intentioned, but the fact is many of the consumers who own these older cars may not be able to afford new cars, even with this stipend.
“We’re concerned that people will trade in their older cars and then have to take on loan payments they truly cannot afford,” said Lee Roberts, TIAA executive director. “We think this is probably not a good idea for the owners of these older cars, who are being targeted by this sales scheme under the guise of helping the environment.”
TIAA also believes that using this money to repair many of these older cars would in many cases help increase the fuel mileage of these cars. And the car owners would not be left with large car loans to repay.
Once the legislation is signed by the president, the government plans to offer either $3,500 or $4,500 for qualified trade-ins at participating dealers from July 1 to Nov. 1, 2009, or until the $1 billion is gone. That equates to approximately 250,000 vouchers.
The way the program works, drivable vehicles made in the last 25 years that have been continuously insured by the same owner for at least one year leading up to the trade in qualify for trade in. Qualifying “clunkers” must have a fuel economy rating of no more than 18 mpg – combined city and highway ratings, which you can find on www.fueleconomy.gov. Sorry, no junkyard finds or used cars bought to “flip” qualify for this program.
New cars qualify only if they have a sticker price of $45,000 or less with a fuel economy rating of at least 22 mpg. If the new model gets four more miles to the gallon than the old car, consumers qualify for the $3,500 credit. With a 10 mpg improvement or more, consumers qualify for a $4,500 credit.
For light trucks, SUVs and minivans, the new vehicle has to get at least 18 mpg and can offer as little as a 2 mpg improvement over the old one to qualify for $3,500. With a minimum 5 mpg improvement, you can qualify for $4,500.
Click here for detailed information about H.R. 2346, which is the Supplemental Appropriations Act of 2009.