Cash for Clunkers - Eligibility Criteria

by Alexandra McDougald on July 6, 2009

gas-guzzlerIn late June President Obama signed into law the “Car Allowance Rebate System” or (CARS) or as it’s also known: “Cash for Clunkers.” This is a program that encourages people to trade in their cars for more efficient models.  It also helps to stimulate the economy (similar to the first time home buyer tax credit) at a time when car sales are lagging. The program runs from July 1st through November 1st 2009. Cars traded in during that time could be eligible for a credit of either $3,500 or $4,500 depending on the car and the increase in mileage the new vehicle provides.

Today, I received an email from the California Society of CPAs that provides a lot of valuable information in regards to the steps consumers can take to participate in the new program:

Step 1: Go to the official government website for the CARS program and look-up the COMBINED mpg rating for your car. If your car is not listed, contact the National Highway Traffic Safety Administration (NHTSA.)

If your car is rated over 18 miles per gallon on the official CARS website, you DO NOT qualify. This rating is not your actual mpg but a standard rating system for the program. There are no exceptions for cars at this time that are rated 19 mpg or higher.

Step 2: If your car is rated as getting a combined mpg of 18 or less, you cleared an important first step. Now you have to make sure your car meets the other requirements for the CARS program which includes ownership, drive-ability, insurance and age. Go back to and click on the “CARS FAQ” button.  You need to read the latest rules for your trade-in. If your cars qualified based on the latest information provided on the FAQ page, go to step 3.If you have unanswered questions, contact the NHTSA.

Step 3: If your car has passed steps one and two, you can use your car as a trade in to purchase a new fuel efficient car. You DO NOT need a voucher in advance of visiting your local dealer. There is no consumer pre-registration needed.  Your local new car dealer will handle all the paperwork starting late July.

Contact a local dealer as soon as the CARS program officially is started. It is estimated that the program will start in late July. When you purchase a new car make sure you inquire about additional manufacturer rebates and incentives.

Other considerations from the site:

  • The vehicle must be less than 25 years old – No digging up a rust-beaten car from the 70’s…
  • You must purchase or lease a new vehicle – This doesn’t qualify for used vehicles.  Leases must be for at least 5 years.
  • For the most part, trade-ins must get 18 miles per gallon or less (when they were new).
  • Trade-in cars must have been registered and insured for at least a year prior – No buying a clunker cheap so you can trade it in.  This also means you can’t trade in a car sitting in your driveway that hasn’t been registered.
  • No voucher needed, dealer will apply the credit – You have to find a registered dealer but after that the dealer takes care of the credit.
  • CARS runs until November 1st or when the funds run out – One billion has been set aside for the program so there is an aspect of first come first served.
  • The car you ‘re trading in must be destroyed/scrapped – Remember the point is to get the inefficient cars off the road.  The trade-in value will most likely not exceed the scrap value.  A dealer will have to provide you with an estimate of it’s scrap-value.
  • The car must be in drivable condition – It has to actually HAVE mileage in other words.  No towing in a car that doesn’t work.
  • The new car must not exceed $45,000.
  • You can find your car’s fuel economy at


Do I qualify if I have a payoff on my loan?
August 23 at 17:30 pm
Dan in Ohio
Help!! After doing a clunker deal a few days ago I had to go back to the dealer to review a couple of things and there was a problem. I've owned my clunker for 2 yrs but last summer I allowed the plates to expire while repairing the van, I then renewed the plates and have been driving it. The dealer is concerned that this may break the requirements. I kept the van insured and in my name continuously and it was never registered in anyone elses name since I purchased it. The state needs to decide.
August 15 at 11:18 am
can anybody tell if small independent dealers can qualify if the company has oned and insured the vehicle for over a year
August 11 at 19:08 pm
cars for charities is a load of crap... did it myself and know other who have and got nothing back.
August 8 at 17:34 pm
For working trucks the rule is not based on the fuel efficieny. As long as it is manufactured before 2001 they all qualify
but cannot be older than 25 years old.

Jim henry
July 13 at 04:50 am
My father swears by this process. He's bought two cars, as good deals.
July 9 at 14:32 pm
If your "clunker" is not eligible for a voucher, you can get a tax deduction if you donate car to charity. Please go to http://www.cars4charities for a list of 1,000+ charities to donate car to.
July 8 at 10:39 am
Andy Drew
Come directly to for your Payday Cash Advance needs. is a reliable cash advance payday loan site.
July 8 at 03:21 am
I just returned from the local Ford dealership and was told that they will be allowing people to cash in their "clunkers" on July 24th. I asked them about the details and was told to actually research online b/c they were not informed about everything yet. LOL

I did my research and found that this is a sweet deal. There is a guy documenting this whole new clunkers deal at and he lays out all the info anyone needs for deciding if this is worth while for them. Very interes
July 8 at 01:50 am

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