Monday, January 9, 2023

Cash For Clunkers Government Program

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Cash For Clunkers Part Ii: Rules Of The Road

Cash for Clunkers

While proposals for a revamped Cars for Clunkers dont appear to be gaining traction, a new goal by the Biden Administration that half of all new vehicle sales be electric by 2030 could give the program new life. If consumers balk at buying EVs, Cash for Clunkers is a way to boost sales of these vehicles while getting older gas-powered models off the road.

First, a little history. The real name for the original Cash for Clunkers program was the Cash Allowance Rebate System. It paid owners a $4,500 rebate to scrap their vehicles in order to spur new car sales. The net result was to put cleaner cars with better fuel economy on the road while giving beleaguered manufacturers a lift. The goal of this latest take on Cash for Clunkers essentially remains the same.

Rest assured, like any government program, there will be rules. Heres what to expect based on the rules governing the first Cash for Clunkers program in 2009 and what may be different this time around.

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How Cash For Clunkers 2021 Program Works

It really is easy! All that you need to do is call or fill out an anonymous form. We will then ask you a few easy and quick questions to make sure we are paying you the top cash for your car. Unlike the government program, we take any vehicle all year, makes, models, and condition. You will receive a fair, upfront, cash offer!

Dont worry if you cant find the title and ownership paperwork aka the pink slip. We have a national vehicle database that enables us to verify ownership of the vehicle, saving you the headache, time, and cost of securing new ownership paperwork.

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What Is The Cash For Clunkers Program

The Cash for Clunkers program was created as a federal program that was launched in 2009 as part of an effort by the U.S. government to save the automotive industry during the Great Recession.

In order to motivate consumers to buy more vehicles and get older, more dangerous cars off the road, the United States essentially offered a government trade-in program: retire your old vehicle, and youll get $1,000 or more in cash that you could put towards the purchase of a newer, safer car.

Finding Current Cash For Junk Cars Programs

Does Cash for Clunkers Help the Environment? It

Although the CARS program is currently over, car owners still can find ways to turn their junk cars into cash.

For example, many cities and local car dealerships offer similar car retirement programs and pay money for recycling vehicles. Generally, all it takes is a quick Internet search or browse through the phone book to find similar car recycling programs. Additionally, many dealerships run advertisements for such cash for junk cars” programs, often offering rebates or similar incentives for buyers who trade in their junk cars for newer models.

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Hyundai To Top Up Federal Program

In the absence of beefier rewards, one automaker has launched its own incentive to top up Canada’s modest scrappage program.

Hyundai Canada announced plans Wednesday to offer cash incentives of up to $1,000 for buyers to scrap their old gas guzzlers.

Depending on the vehicle, customers who turn in their old clunkers for recycling will be offered $500 to $1,000 in cash that can be applied to the purchase of a new, more fuel-efficient Hyundai. The money would be in addition to other incentives.

The South Korea-based company said it’s the first automaker in Canada to offer such an environmental incentive program.

How Does Cash For Clunkers Work

The original program that ran in 2009 gave new vehicle buyers vouchers of $3,500 to $4,500. The payments went towards scrapping vehicles up to 25 years old that were still licensed and in running order. The idea was to scrap older, less fuel-efficient vehicles for new models with better fuel economy.

The program succeeded in stimulating the market and removed some 700,000 vehicles from the road. But critics said that it unnecessarily scrapped cars that low-income motorists could have used. And according to Kelley Blue Book data, the reduction in the vehicle population resulted in higher used car prices.

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Cash For Clunkers Pros And Cons

Those promoting a new Cash for Clunkers program believe it would stimulate the market. But more important, its focus on electric vehicles would hasten the transition away from traditional internal combustion engines. The extra money may eliminate the current price differential between more expensive EVs and lower-priced conventional cars. Eliminating these vehicles would cut emissions and boost the overall fuel efficiency of the U.S. fleet.

While the program is a way to get older, less fuel-efficient, and less safe vehicles off the road, cons see it as scrapping perfectly good, low-priced vehicles that low-income individuals can use. It would also raise the prices of used vehicles when these prices are reaching all-time highs. In fact, many of the eligible cars may be worth more than what the government wants to pay to scrap them. There are also concerns that the auto industrys EV capacity and the nations charging infrastructure may not be mature enough to support replacing 25-percent of the vehicle fleet in such a short period.

So What Was Cash For Clunkers

Cash For Clunkers Program Draws Mixed Reviews

For those who don’t remember, it allowed consumers to trade in old vehicles for newer ones, promising a baseline incentive for nearly any worthless old car that could make it to a dealer lot and met certain fuel-economy criteria relative to then-new vehicles. One goal of the program was to spur trade-ins for new cars by giving buyers a voucher for a few thousand bucks no matter what pile they traded in another was to get primarily older, less fuel-efficient vehicles off the road by tying the trade-in incentive to those aforementioned efficiency parameters. Adam Jonas, the outspoken auto analyst from Morgan Stanley, tells Barron’s in an interview he does not think carmakers will fail or go bankrupt as a result of the current situation, but the industry will need support to get going again, restart factories, and jolt buyers back to showroomsand the solution could once again be great deals supported by the government.

“We expect a Cash for Clunkers program to be much larger in scope and longer in duration than what we saw. In 2008 and 2009, we saw a $3 billion package that stimulated about $14 billion of purchases. This time around we’re expecting about $10 billion of stimulus that drives $50 billion of purchases and adds about four million of SAAR over a six-month period beginning in the fall and then into early 2021,” Jonas said.

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The Other Way To Get Cash For Clunkers

So what do you do if you dont live in California? And what if your car hasnt failed its smog test? Or what about cars that arent in any condition to drive? You can still get good money for your car no peddle or hassle is needed.

CarBrain buys cars in any condition. Regardless of your location in the United States, whether its emissions system is working, or if it runs and drives, well buy it. We specialize in purchasing less-than-perfect cars at a fair price.

Our offers always include FREE towing and FREE title transfer you wont have to pay any DMV fees to sell us your car. Well even walk you through how to complete the transfer with the Department of Motor Vehicles to ensure you arent held liable for the car after you sell it.

Whether you have a car thats been in an accident, its been flooded or hailed on, it has electrical or mechanical issues, it doesnt look good anymore, or its rusting away, well buy it for cash.

Simply call or click to receive a fast and accurate quote. Theres no obligation at all. If the offer looks good to you, simply accept it. Youll receive payment fast, typically within 24 to 48 hours, and well pick up your car soon after.

You have nothing to lose by requesting an offer from CarBrain today The best part is, unlike government programs, we arent going anywhere well buy your car in 2021, 2022 and beyond!

Tracking Vins To Avoid Fraud

After Hurricane Katrina, vehicles that were declared total losses in one state were transferred to other states and resold to unsuspecting consumers with clean titles, a process known as title washing. The federal government used a few strategies to avoid a similar situation occurring with vehicles from the CARS program, where âclunkersâ would be illegally retitled and resold to consumers.

One involved the National Motor Vehicle Title Information System , a federal program originally set up in 1992 to help deter vehicle theft. The CARS program required recyclers to report the Vehicle Identification Numbers and the status of âclunkerâ to the NMVTIS. The searchable database would then provide that information to consumers, for a fee.

The federal government also partnered with providers of VIN-based vehicle history reports, such as CARFAX. The National Highway Traffic Safety Administration submitted the VINs from the 700,000+ âclunkersâ to CARFAX and other vehicle history providers. NHTSA and CARFAX also used the information to create a free âclunker check service,â which allowed a user to submit a VIN and determine immediately if it had been reported as a salvage vehicle.

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Advantages And Disadvantages Of Cash For Clunkers

Supporters of the program have argued that the program was a success because it provided a stimulus to the economy and replaced many fuel-inefficient vehicles with more fuel-efficient vehicles that created less pollution. The program removed over 677,000 fuel-inefficient cars from the road.

However, the program has been criticized. The libertarian Mises Institute called the program an example of the “broken windows” fallacy, which holds that spending creates wealth. Analysts with partly blamed the program for a shortage of used vehicles. While the program was partly intended as a stimulus for domestic auto manufacturers, only about 49% of new vehicles purchased were manufactured in the U.S.

The majority of vehicles traded in the Cash for Clunkers program were trucks, at 84% of total vehicles traded. The majority of vehicles purchased were passenger cars, at 59% of total vehicles purchased.

The National Bureau of Economic Research stated that the program’s positive effects were modest, short-lived, and that most of the transactions it spurred would have happened anyway. A study by Edmunds claims that the program spurred a net 125,000 vehicle purchases, costing taxpayers an average of about $24,000 per transaction.

Furthermore, most scientific analysts believe that the benefit to the climate was negligible primarily because the program resulted in a very high cost per ton of CO2 avoided.

Would Cash For Clunkers Work Today

Cash For Clunkers Return Advocated By Ford Executives

Because of covid-19, all industries are suffering right now, except for maybe toilet paper. A new Cash for Clunkers program could drive about $50 billion in sales for the car industry. But to avoid mistakes from the past, a few changes would have to be made.

Although the environmental focus was a source of problems in the past, it should continue to be a key point of the program. This provides a moral justification for bailing out the auto industry. Some smart moves could be increasing the fuel efficiency cap, and perhaps emphasizing safety features like advanced driver assistance.

Including patriotic benefits would also appeal to the crowd who dont care about the environment by focusing on helping out American industries. Requirements like ensuring the program would only apply to cars made in the US could help in that regard. Car manufacturers that are struggling to create expensive safety and environmental features will get a boost and keep the models that offer them stable.

A second Cash for Clunkers program could work in our current scenario if some changes were made. Even politicians in Germany are considering similar plans, so the concept does not just apply to us. Whatever the case, get ready because we soon might be getting incentives from the government to buy new cars.

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Is Your Car Eligible For The Cash For Clunkers Program

To find out if your vehicle is eligible for the Cash For Clunkers Program, you will need to reference the official government Cash for Clunkers website,, and the official EPA fuel ratings from Environmental Protection Agencys fuel economy website, also has an interactive vehicle fuel efficiency search with updated information. Be sure to visit the official government sites because there are many websites with false information and there are Cash for Clunkers scams popping up all over.

Trade in vehicle eligibility: Vehicles must be less than 25 years old, which can be determined by looking at the vehicle safety standard certification sticker found on the inside of the driver side door. Trade-in vehicles must get a combined 18MPG or less, and must be registered and have had insurance for the entire previous year.

Additional trade-in information: You may also be required to provide additional information, such as the number of cylinders in the engine, engine size in liters, transmission type, fuel type , drive type , Gross Vehicle Weight Rating , or even whether or not your vehicle has a supercharger or turbocharger. The dealership should be able to help you get this information if you do not know it off hand.

Here is a diagram from the Wall Street Journal that explains the details:

How Much Money Will I Get

If your car is eligible for the program, you can get cash for your scrap car. But how much? It depends on your income level.

The base amount for the Cash for Clunkers 2021 program is $1,000. Youll get at least $1,000 for your old car if it meets eligibility criteria. But if your income level is below a certain threshold 225 percent of the poverty level then you could get even more for it. For people whose income is below the threshold, $1,500 is how much youll get for your car.

Keep in mind that when the money runs out, Cash for Clunkers stops. That means your car might qualify but you dont get any cash because the funds coffers are empty.

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The Original Cash For Clunkers

The Cash for Clunkers program was the nickname of the popular U.S. federal governments $3 billion plan known as the Car Allowance Rebate System. They provided cash incentives for individuals to trade in their old, less fuel-efficient vehicles for new vehicles that are better for the environment.

The original Obama-era Cash for Clunkers had two purposes in mind. It not only helped to revive the automotive industry by stimulating car sales, but also encouraged residents to purchase newer, more energy-efficient vehicles.

This element was to help cut back on emissions and greenhouse gases. Qualified consumers received an amount between $1,000 and $4,500 to put towards a new replacement vehicle. It was more popular than previously anticipated, and the government funds depleted within only a few short months. The program was shut down in August of 2009.

There were specific guidelines that ensured that certain vehicles were eligible for the program based on age, fuel economy, condition, and current registration. Applicants were also bound to purchase a replacement vehicle that was less than $45,000 and a precise fuel efficiency amount.

The final numbers for this program back in 2009 boast a total of 690,000 vehicles sold through the government incentive program in only a few short months. It also boosted auto sales of the Big Three automakers and increased their new vehicle market share by about 2%.

Will There Be A Cash For Clunkers Program In 2021

Beneficial Clunker Program

Unlike the previous program, which was designed to spur a recovery in a market that saw a sales collapse of 40 percent, the new effort is an environmental initiative. The goal is to spur sales of electric vehicles, which currently account for about 2 percent of the vehicle fleet. While car sales fell dramatically last year due to COVID-19 shutdowns, demand quickly snapped back to pre-pandemic levels. However, a shortage of vehicles from production cutbacks due to the coronavirus and a microchip shortage is actually helping bring profits to the industry on higher vehicle prices.

While the infrastructure bill focuses on building 500,000 new charging stations, the push to extend the current $7,500 federal EV tax credit is stalling out. Proponents want to raise the per manufacturer cap from 200,000 to 600,000 units. Currently, Tesla and General Motors no longer offer the credits having exceeded the volume threshold. The incentive would drop to $7,000 and convert to a direct rebate going to the transaction.

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How Will The Government Protect Against Fraud

The National Highway Traffic Safety Administration is in charge of the program and will make an announcement regarding full qualifications within 30 days of the bill being passed. The NHTSA needs the time to work out the details to prevent fraud and ensure appropriate measures are taken to properly dispose of old vehicles.

Right now, the government is looking at methods to verify cars have been continuously registered and insured by the owner for the previous year and determining ways to ensure the cars that are traded in are sent to the junkyard and destroyed instead of being used or resold. Consumers should also be aware of Cash For Clunkers scams.

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