"CASH FOR CLUNKERS"
The President recently signed legislation into law that gives a cash incentive for individuals and businesses to trade in older gas-hogging vehicles for new, more fuel-efficient ones.
· Receive cash for your old clunker - The incentive takes the form of a voucher of $3,500 or $4,500 depending on the type of vehicle traded in and the fuel efficiency of the vehicle purchased.
· Buy or lease a new vehicle - Customers would take these vouchers and use them to offset the cost of buying or leasing qualifying new vehicles when trading in their old clunkers. If leasing, the lease must be at least five years.
· Must be purchased by November 1, 2009
Cash-for-clunker Specifics for New Passenger Autos
To qualify for a cash-for-clunkers allowance, a passenger auto must be new (not used), have an MSRP of no more than $45,000, and have a Combined Fuel Economy (CFE) rating of at least 22 MPG.
Here's the most important part: when a customer trades in an eligible clunker (defined later) for a qualifying new passenger auto, the dealer gets the $3,500 allowance if the new auto's CFE is at least 4 MPG higher than the traded-in clunker's CFE. If the new auto's CFE is at least 10 MPG higher, the dealer gets the maximum $4,500 allowance. Note that a traded-in automobile must have a CFE of 18 MPG or worse to qualify for the cash-for-clunker deal.
Cash-for-clunker Specifics for New Trucks and Vans
To qualify for a cash-for-clunker allowance of either $3,500 or $4,500, a truck or van must be new (not used), and it must have an MSRP of no more than $45,000.
Category 1 Trucks. This category includes SUVs and small to medium pickups and vans. They must have CFEs of at least 18 MPG. If the new truck's CFE exceeds the clunker's CFE by 2-4.99 MPG, the $3,500 allowance applies. If the new truck's CFE is at least 5 mpg higher, the $4,500 allowance applies.
Category 2 Trucks. This category includes lager pickups and vans, based on the length of the vehicle's wheel base. They must have CFEs of at least 15 MPG. If the new truck's CFE exceeds the clunker's CFE by at least one MPG (or if a Category 3 truck is traded for a Category 2 truck), then the $3,500 allowance applies. If the new truck's CFE exceeds the clunker's CFE by at least two MPG, then the $4,500 allowance applies.
Category 3 Trucks. This category is for "work trucks" rated between 8,500 and 10,000 pounds. The $3,500 allowance is available when a Category 3 truck of model year 2001 or earlier is traded in for a new Category 3 truck. However, the traded-in clunker must be of similar size to the new vehicle, or larger. The $4,500 allowance is not available for Category 3 trucks.
Traded-in Clunkers Must Meet Strict Guidelines
The traded-in vehicle must meet the following criteria:
· Be in drivable condition;
· Have been continuously insured under applicable state law and registered to the same owner for at least one year immediately prior to the trade-in date;
· Have been manufactured less than 25 years before the trade-in date; and
· Must have a CFE of 18 MPG or less.
As a practical matter, the traded-in clunker must be worth less than the $3,500 or $4,500 allowance (whichever applies) because it must be destroyed as part of the deal. The dealer must certify that the clunker will be conveyed to an "entity" that will crush or shred the clunker.
Do not hesitate to contact our firm if you have any questions about this program.