Cash for Clunkers

Bill Harding doesn't like to wash his 1996 Jeep Grand Cherokee. The paint comes off when he does.


The clunker has 197,000 miles on it and doesn't have many miles left. Its owner is trading it in for a new Chevrolet Malibu as soon as the federal government finalizes the procedures for its Cash for Clunkers rebate program -- expected Friday.

"It has been good hauling junk around. It's got a busted taillight. It is probably illegal to drive," Mr. Harding said.

The Evans man paid $500 for the Jeep in 2007 and has been using it to commute to his job as a bookkeeper at Quebecor World. He has spent $3,200 to fix and maintain it, so the $4,500 rebate for the purchase of the new car is drawing him to the showroom.

The federal government has set aside $1 billion in incentive money in what is known as the Car Allowance Rebate System to get motorists to trade in their gas guzzlers for more fuel-efficient new cars. Having that additional traffic into showrooms has auto dealers cautiously optimistic that sales will pick up soon.

"No doubt our industry needs some help," said Todd Torchia, the general manager of Taylor Hyundai on Washington Road in Martinez. "I think it will be a tremendous boost for the new-car business."

Hyundai has a head start and is floating dealers the money for new-car sales under the program until the rebate money starts flowing, Mr. Torchia said. Taylor has already sold three cars.

Other dealers are starting a waiting list. Richard Pendarvis, of Pendarvis Chevrolet in Edgefield, S.C., said he has taken two down-payments on new cars and will close the deals this week when the federal procedures are ready.

Mr. Harding is one of those customers.

"It is a good program. It is going to jump start the automotive industry to some extent. It will probably get some unsafe vehicles off the road," Mr. Harding said.

Depending on the difference on the fuel economy between the old vehicle and the new one, buyers will get between $3,500 and $4,500 knocked off the cost of the purchase.

Eligible clunkers include passenger cars and light trucks no older than the 1984 model year that are rated at no more than 18 miles per gallon.

For eligible cars, the credit value will be $3,500 if the new vehicle gets at least 4 mpg more than the clunker or $4,500 if it gets at least 10 mpg more.

For light trucks, the credit value will be $3,500 if the new truck gets at least 2 mpg more than the vehicle being traded in or $4,500 if it gets at least 5 mpg more.

The rebate program expires Nov. 1.

"Given the Cash for Clunkers program and the current availability of an income tax deduction for sales taxes paid on a new vehicle, there has never been a better time to purchase a new vehicle," said Bill Morie, the president of the Georgia Automobile Dealers Association.

Mr. Pendarvis said: "When you're giving a rebate, you're enticing someone to come buy a car. If the car is worth $1,000 and he's going to get $4,500, that's some enticement to get that guy in. But how many people that are riding around in a $1,000 car can buy a new one? That's the wait-and-see factor."

The trade-in clunkers will be headed for the scrap yard, a requirement of the federal rules.

Mr. Torchia said that hose are the "bread and butter" cars of small, used-car lots and that he sees the program hurting that business.

Reach Tim Rausch at (706) 823-3352 or


Your trade-in vehicle must:

- Be between the 1984 and 2001 model years

- Have a combined city/highway fuel economy of 18 miles per gallon or less

- Be in drivable condition

- Be continuously insured and registered to the same owner for the previous 12 months.


To buy a new car:

- If the new vehicle has a combined fuel economy that is at least 4, but fewer than 10, miles per gallon higher than the traded-in vehicle, the credit is $3,500.

- If the new vehicle has a combined fuel economy value that is at least 10 miles per gallon higher than the traded-in vehicle, the credit is $4,500.

To buy a new van, pickup truck or sport utility vehicle:

- If the new vehicle has a combined fuel economy value that is at least 2, but fewer than 5, miles per gallon higher than the traded-in vehicle, the credit is $3,500.

- If the new vehicle's combined fuel economy value is at least 5 miles per gallon higher than the traded-in vehicle, the credit is $4,500.

(Under the program, you may lease a new vehicle, provided the lease period for it is at least five years.)


The law requires the trade-in vehicle to be destroyed. Therefore, the value that is negotiated with the dealer for the trade-in vehicle is not likely to exceed its scrap value. The law requires the dealer to disclose an estimate of the scrap value.

More rules can be read at

Source: National Highway Traffic Safety Administration's Car Allowance Rebate System