President Obama introduced a “Cash for Clunkers” program last week.
The $1 billion program will provide drivers with up to $4,500 in trade in value if they turn their poor-mileage clunker in for a more fuel-efficient vehicle. The government is hoping that the new program will take off the way it has in Germany, and will result in more than a quarter of a million new car sales throughout the Country while simultaneously getting gas guzzlers off the road.
According to an article in the Newark Sar-Ledger, this new law could increase Garden State car sales by roughly 24,000 sales and provide $50 million in additional tax and motor vehicle fee revenue for New Jersey. It is widely understood that other states will enjoy the same success. That being said, the program is not as cut and dry as it may suggest.
For instance, the car that is going to be traded in must have been registered in the owner’s name and insured for at least one year. Eligible clunker cars must also be drivable and have an overall fuel economy rating of 18 or less miles per gallon. Furthermore, in order to qualify for the top dollar amount, $4,500, the new vehicle has to get 10 miles per gallon more than the car being traded in, which is a pretty lofty feat. If you are looking at a van, SUV or pickup, it has to get 5 additional miles per gallon to receive the top rebate. The new vehicle being purchased cannot cost more than $45,000.
If you cannot find a vehicle that gets 10 miles more per gallon, you can get a $3,500 rebate if you find a car that gets 4 additional miles per gallon. For vans, SUVs and pickups, an extra 2 miles per gallon will fetch a $3,500 voucher.
The program applies only to new cars purchased or leased between July 1and November 1. Dealers have to register for the program in order to participate.
The other benefit to this program is while many of the clunkers traded in would not qualify for lemon law or breach of warranty protection due to their age and mileage, the new cars will qualify, giving consumers an extra piece of mind.