Last week, the feds injected another $2 billion into the "Cash for Clunkers" program. Cars are selling and the Attorney General’s Office is receiving questions from consumers about just how much dealers are supposed to knock off of their trade-in. Hopefully, this helps clear up some of the confusion.
Officially known as the Car Allowance Rebate System, or CARS, the program was created to boost new-vehicle sales and to take gas-guzzlers off the road. Consumers can receive a credit of either $3,500 or $4,500 toward the purchase of a new vehicle when trading in a car less than 25 years old that gets 18 mpg or less. The amount you get depends on your “clunker” and what you buy. Remember, the credit only applies to purchases of new cars, not used, and not all trade-ins qualify. You can find out if yours does by visiting the Web site: www.cars.gov.
Participating new car dealers will apply the credit, reducing the price you pay for your purchase or lease. The government will reimburse the dealer. Or, at least that’s how it is supposed to work.
Dealers have had problems filing the paperwork, in part because of Web site freezes due to multiple dealers trying to file claims at the same time.
Some dealers are requiring customers to sign an “addendum” to their contract that states that if the government can’t pay, the customer will have to make up the difference. In other words, you’ll be asked to write a check for another $4,500 if the dealer doesn’t get his dough. If you made a Cash for Clunkers deal and the dealer is now asking for more money, please contact our office.
In case you’re curious what happens to that “clunkers,” they’re not allowed back on the road. As Time explains:
"In order to receive federal reimbursement for the subsidy consumers get for trading in their cars, dealers must first destroy the engine. One common method is to drain the car's oil and flood the engine with sodium silicate, or liquid glass. Dealers then turn the car on and rev the engine to let the solution harden. In just a few minutes, the car becomes inoperable. … Once the engine is dead, a recycling lot [salvage yard] can take possession of the car. From that time, it has 180 days to sell the pieces of the car that retain some value. Even though the engine's a lost cause, everything from the scrap metal to the hubcaps is available to buyers. When the resale period is up, any leftover parts must be destroyed, and the government is notified that the car is gone for good."
One last thing, steer clear of so-called “Cash for Clunkers” Web sites that ask for personal information such as your Social Security number or bank account so they can “register” you for the program. They’re scams.