The Consumer Assistance to Recycle and Save Program, more commonly known as the Cash For Clunkers Bill, has been one of the more popular financial incentives to come out of Washington in years.

The provisions in the bill allow for two different governmental rebates in the form of vouchers, either a $3,500 or $4,500 rebate based on the fuel economy of the vehicles involved in the deal. Vouchers can only be used to offset the purchase price or lease price of a new vehicle. The calculation that counts is the “combined” fuel economy of both your “trade in” and the new vehicle. Find the fuel economy figures at fueleconomy.gov

How to Qualify For a $3,500 Voucher:

Purchase or lease a new passenger automobile with no less than 22 combined mpg and at least 4 combined mpg higher than your trade in vehicle. Or,

Purchase a new Category 1 Truck (pickup/SUV) with no less than 18 mpg and at least 2 combined mpg higher than the eligible trade in vehicle, or

Purchase a new Category 2 Truck (Large Pickup/van) with no less than 15 mpg and at least 1 mpg higher than an eligible category 2 truck trade in.

How to Qualify for a $4,500 Voucher:

You must purchase/lease a new passenger automobile with no less than 22 combined mpg and at least 10 combined mpg higher than your trade in vehicle. Or,

Purchase a new Category 1 Truck (pickup/SUV) with no less than 18 mpg and at least 5 combined mpg higher than the eligible trade in vehicle, or

Purchase a new Category 2 Truck (Large Pickup/van) with no less than 15 mpg and at least 2 combined mpg higher than an eligible category 2 truck trade in.

What is an Eligible “Trade in”?

To be eligible, under cash for clunkers, to trade your vehicle must:

1. Be drivable
2. Have been insured consistent with state law and registered to the same owner for no less than 1 year
3. have been manufactured not more than 25 years ago
4. in the case of an automobile, have a combined fuel economy of 18 mpg or less (does this include trucks?)

Is there anything I can’t buy?

According to program restrictions, you cannot use the money to buy:

1. A car that is worth more than $45,000
2. a passenger car with less than 22 mpg
3. a Category 1 truck with less than 18 mpg
4. a category 2 truck with less than 15 mpg

Note: The bill only applies to vehicles purchases between July 1, 2009 and November 1, 2009.

The bottom line:  If you are already looking to buy a NEW, fuel-efficient car, and have an older,  inefficient trade-in the “Cash for Clunkers” offer could be a great source of some extra money to put towards the purchase. New cars always sell at a premium, though. You are likely to save more in the long run to shop around for a good used car.

Read the full text of Title XIII – Consumer Assistance to Recycle and Save Program for more details.

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