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Get cash for your clunker


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POSTED: Friday, July 17, 2009

“;Cash for clunkers”; is a catchy commercial phrase for a federal program that could save consumers $3,500 or $4,500 on the purchase of a new vehicle.

“;It's sort of like finding $4,500 in your driveway,”; said Dave Rolf, executive director of the Hawaii Automobile Dealers Association.

Cash for clunkers is a sort of nickname for the CARS program, or the Car Allowance Rebate System, part of the Consumer Assistance to Recycle and Save Act of 2009 (also CARS), being administered by the National Highway Traffic Safety Administration.

The goal is to get consumers' old, gas-guzzling and environment-polluting cars, vans and trucks off the road forever and to stimulate the economy—in exchange for significant savings on a new, more fuel-efficient vehicle.

Participating consumers will “;help the economy, help the environment and save some money, a pretty substantial amount,”; Rolf said.

Here are some questions and answers regarding the program:

Question: Is my vehicle eligible?

Answer: It must be drivable, must have been registered under the same owner and continually insured for at least one year; and, for a broad range of vehicles, must not be more than 25 years old. Category 3 trucks, between 8,500 and 10,000 pounds gross vehicle weight, must have been manufactured prior to 2001. With the exception of Category 3 trucks, which have no mpg rating, vehicles to be traded in must have a combined fuel-economy value of 18 miles per gallon or less.

Q: How can I figure out my vehicle's mpg rating?

A: The ultimate arbiter of mpg ratings will be NHTSA. It will set up an online calculator at http://www.cars.gov that consumers can use to get an official mpg rating to determine eligibility.

Q: Will the government give me the cash?

A: No. The amount will be credited toward your purchase, for which dealers will seek reimbursement from NHTSA.

Q: How many credits can vehicle owners get?

A: One per person. Further, NHTSA guidelines state that “;not more than one credit may be issued for joint registered owners of a single eligible trade-in vehicle.”;

Q: Which dealers will participate?

A: A full list eventually will be posted at http://www.cars.gov. Consumers may ask about particular dealers via the toll-free NHTSA hot line at (866) CAR-7891.

Q: What can I buy or lease with my trade-in credit?

A: Generally, cars, trucks and vans with a manufacturer's suggested retail price at or below $45,000, with a combined mpg rating higher than that of the trade-in vehicle. NHTSA guidelines describe eligible new vehicles as having a minimum combined mpg rating of 22 for passenger vehicles, 18 mpg for Category 1 trucks and 15 mpg for Category 2 trucks. A full list of eligible vehicles will be posted online by next Friday.

Leases of new vehicles require a five-year term.

Q: What will happen to my old car, truck or van?

A: All traded-in vehicles will be scrapped by companies NHTSA is working to identify. All parts, with the exception of the engines and the drivetrains, may be salvaged for scrap value.

Q: When does the program end?

A: The CARS program is set to expire Nov. 1, but could end earlier if its $1 billion in funding for dealer reimbursements is exhausted before that date.

Newspaper, radio, television and online advertising by Hawaii automobile dealers is already promoting cash for clunkers in the hope that increased sales will help offset a long economic slump.

Most, if not all, new-car dealers in Hawaii are expected to register with NHTSA to participate. Some, including Servco Pacific Inc., have begun the process, said Rick Ching, the company's executive vice president.

NHTSA will accept the first dealer submissions for reimbursement beginning July 27, but it is not too early for consumers to check into the program, said Stan Masamitsu, president of Tony Hawaii Automotive Group Ltd. He is also president of HADA.

Tony Group Autoplex has received numerous calls from the curious, and “;we're encouraging people ... to start the process”; so they will be ready to take advantage of the program, Masamitsu said.

“;If you've got a big ol' truck, you can get almost any car, but if you have an older Honda Civic or something, the pool of cars that qualify shrinks accordingly,”; he said.

               

     

 

ON THE NET

        » www.cars.gov
       

» www.fueleconomy.gov/feg/findacar.htm

       

» www.nhtsa.gov

       

» www.hawaiiautodealer.com

       

 

       

A vehicle worth more than $3,500 or $4,500 according to Kelley Blue Book or other sources might not be the best candidate for the program.

“;You really have to have a car that is worth less than the voucher amount,”; said Ching, of Servco.

Shoppers also should look around for the best combination of manufacturer and dealer incentives, as NHTSA requires dealers to offer the credit in addition to discounts, rebates and other programs, such as the hybrid-vehicle credit.

The average length of vehicle ownership is up to 56.3 months from 49 months six years ago, according to auto industry tracking firm R.L. Polk & Co.

The not-yet-recovered economy and fear about possible job loss could keep people from trading in a vehicle they own outright for a shiny new ride with that new-car smell, for which they will have to fork over monthly payments.

Still, the program could make the allure of a new car hard to resist.

“;It's a perfect situation for the consumer,”; said Rolf of the dealer association.

It used to be that “;we could use ... all the fingers on one hand to show all the great reasons”; to buy a car. “;Now we have to use two hands,”; Rolf said.

               

     

 

HOW IT WORKS

        Hawaii vehicle owners can receive either a $3,500 or $4,500 credit toward the purchase or five-year lease of a more fuel-efficient vehicle under the federal CARS program.
       

» Eligible for trade-in: Vehicles that get 18 miles per gallon or less that have had the same owner and been continuously insured for one year. Work trucks between 8,500 and 10,000 pounds gross vehicle weight must have been built prior to 2001.

       

» Ineligible for trade-in: Most passenger vehicles built during and earlier than 1984.

       

» Eligible vehicles: New vehicles with a manufacturer's suggested retail price at or below $45,000. Vehicles with minimum combined fuel economy value of 22 mpg for passenger vehicles, 18 mpg for Category 1 trucks, 15 mpg for Category 2 trucks. A full list of eligible vehicles will be posted online by next Friday. New vehicles also may be leased, but a five-year term is required.

       

» Ineligible vehicles: Used vehicles and vehicles that exceed $45,000 MSRP.

       

» Getting $3,500 or $4,500: Depends on the difference between the combined fuel economy of the old vehicle and that of the new vehicle. For a passenger vehicle, a 4- to 9-mpg difference will net a $3,500 credit, while a difference of 10 mpg or more will earn a trade-in credit of $4,500. The consumer does not receive cash, but a credit toward the purchase or lease of an eligible vehicle. Dealerships will apply to the National Highway Traffic Safety Administration for reimbursement.

       

» Traditional trade-in value: None. Trade-in value as calculated by Kelley Blue Book or other sources does not apply to CARS transactions, as vehicles that are traded in cannot be resold and will be scrapped. However, the CARS Act requires participating dealers to credit the consumer in addition to dealer or manufacturer rebates or discounts.

       

» Program's duration: The CARS Program ends Nov. 1 or earlier, depending on when the $1 billion appropriation to fund dealer reimbursements is used up.

       

» NHTSA hot line: (866) CAR-7891