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Cash-for-Clunkers Bill Could Offer $4,500 for Your Old Car

My father drives an old Lincoln town car that has over 300,000 miles on it. That’s right, 300,000. Not only does he drive it, but he commutes over 90 miles each way in it, every day. Everybody who knows him thinks he should have gotten a new car oh, about 100,000 miles ago. But my dad is fanatically frugal and, perhaps more importantly, he simply likes his car. He’s determined to drive that old Lincoln until it simply doesn’t want to drive anymore. Unless the so-called “cash-for-clunkers” bill becomes law. The bill (which the House passed it today) could offer drivers like my dad up to $4,500 towards a new, more fuel-efficient ride. What’s the cash-for-clunkers bill all about? And could you benefit?

The cash-for-clunkers bill would give a $4,500 credit to anybody who trades in an old car for a new(er) vehicle that gets at least ten miles per gallon more, or a $3,500 credit for new cars that get between four and up to 10 MPG better fuel economy. According to the current version of the bill, to qualify, the trade-in vehicle must be model year 1985 or newer, be drivable, and must be destroyed upon trade-in (it cannot be resold). Additionally, the new car purchased must get at least 22 MPG or, if it is a light-duty truck, at least 18 MPG.

Obviously, the cash-for-clunkers bill is intended to eliminate less fuel efficient cars and create an incentive to buy a car (and presumably give a boost to the flagging auto industry). Critics of the bill say that we’re over-incentive people to spend money in certain struggling industries (this program would be akin to the $8,000 first-time home buyer tax credit designed to stimulate the housing market).

Personally, I think the cash-for-clunkers bill is a great idea. (And not just because I want to see my dad get some new wheels!) Even if the economy (and auto industry, in particular) weren’t in such dire straights, I believe it’s partially our government’s responsibility to begin to find ways to reduce our dependence on oil. Although moving towards more fuel-efficient vehicles isn’t a big a step as, say, developing alternatives to fossil fuels; it’s a start. Plus, this bill pushes for greater fuel efficiency in a model that is true to our free-market economy: Drive a more fuel-efficient car, get a financial incentive. Makes sense to me.

What do you think about the cash-for-clunkers bill? A good idea or too much government involvement? Would you take advantage of the incentive? Let us know!

About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

  1. Absolutely I’ll take advantage of this program. We’re holding off replacing a 1995 Explorer until it passes.

    This program is not like the first time homebuyers credit. That $8,000 is not really a credit. It is an interest free loan that the taxpayer repays over a series of tax returns. The cash for clunkers does not get repaid – it is truly free money.

  2. Actually 8,000 IS a credit. You don’t have to pay it back. The 7,500 for 2008 was a loan.

  3. I hope this law gets passed, so I can trade in my Ford “Exploder” with 160,000 miles before it dies. The last thing I need is another car payment, but my cars days are numbered.

    Originally I was going to drive the car until it died, but if it dies than I do not qualify for the offer. Additionally, $4500 would equate to about 12 new car payments, and I am not sure my car will even that long

    Thanks for bringing this to my attention.

    -Dan Malone-

  4. The debate that passes through my mind is: “Is it worth trading in my old, fully paid off car for a new one (with a car payment)?” Based on my own situation, I am definately looking into the options. Just to throw a few other ideas out there, I’ve seen similar articles about this cash-for-clunkers bill and the key points that are mentioned include:
    1. This bill requires your trade-in (old) car to be destroyed. By doing so, a large number
    of cars that are normally on the resale market are no longer available. While you might
    trade in your car for a new one, there are plenty of people that rely on you upgrading
    so they can purchase a used (‘new to me’) car.
    2. The $4,500 is much more than the tax write off for donating your old car to
    any non-profit organization, so this bill would potentially put all those “Donate your car
    to charity” organizations out of business. Likewise, it would hurt the repair shops.

    Now I’m not saying I’m against this bill. It’s the first one in a long time that I could
    actually take advantage of since I narrowly missed out on the $8,000 new home deal.
    I’m just curious as about others thoughts on this topic.

  5. Diana L. Beal says:

    I would absolutely take advantage of this opportunity. I think it is a great idea.

  6. This is great! It’s a small step towards a greener planet. There are many vehicles built around that time frame that looked nice but still guzzled gas like crazy. The idea of DESTROYING the vehicle once surrendering it will keep would be used car dealerships from reviving these cars and putting them back out on the street. It would also prevent the RE-SELLING of the surrendered vehicles engine that may be used to revive another vehicle, which would then defeat the purpose of this program.

  7. Yes, absolutely. My son has an older model car and this would be a god send for him Especially if it doesnt have to be a brand new car, just a newer model w/ better gas mileage!

  8. I have a 1981 Chevy malibu that I rebuilt a few years ago. It gets 12 mpg with a 305 small block. I would come in my pants if i could get a $4500 acura for it.

  9. I don’t qualify because my car already gets good gas mileage. But my dad swears by the car buying process here:
    http://excarsalesman.typepad.com

    I have a feeling dealers are going to automatically increase prices because of the increased demand (artificial) for great MPG cars. So the thousands of savings from this bill for consumers is not entirely accurate.

    With the price increase, I’m certain some markets you’ll come out even as if they never offered this voucher. It is poorly written legislation.

  10. Cindi Singraber says:

    I think it is a good idea…

    My question is…we just purchased a New car this month and traded in our 1998 Plymouth Voyager. The dealer gave us $1000 trade in. Is there any kind of a incentive for us..or did we purchase too early?

  11. Susan Christine says:

    I think that the rebates should only be applied to automobiles that get over 45 mpg, like the Prius. And, I think it should be ongoing, say for the next 10 years. Now THAT might stimulate people to really do something about driving more fuel efficient vehicles.

  12. chayakiran venigandla says:

    can i get money for my old car

  13. chayakiran venigandla says:

    my car is toyota camry gets 20mpg year is 1998

  14. This is a great idea since i drve a 1994 ranger but to restrict the mpg on cars that u would be qualifed tp buy I think is wrong but as long as the mpg on the new car would be higher is the most important issue to me

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