The Obama administration will end the popular $3 billion Cash for Clunkers program on Monday, giving car shoppers a few more days to take advantage of big government incentives.
The Transportation Department said Thursday that the government will wind down the program Monday at 8 p.m. ET. Car buyers can receive rebates of $3,500 or $4,500 for trading in older vehicles for new, more-fuel-efficient models.
Transportation Secretary Ray LaHood said the department was "working toward an orderly wind-down of this very popular program."
Just days after its launch in late July, the "clunkers" program had been drained of its original $1 billion budget. Congress authorized an additional $2 billion to extend the program, which has been likened to a shot of adrenaline for the U.S. auto market.
Through Thursday, auto dealers had made deals worth $1.9 billion, and the incentives had generated more than 457,000 vehicle sales.
But the administration needed to put a halt to the program to avoid surpassing the $3 billion funding level. Consumers were on pace to exhaust the program's coffers in early September, and many of the most popular fuel-efficient cars are in short supply. In addition, some dealers have complained about long delays in getting reimbursed for the car incentives.
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"I think if we can get a clean cutoff Monday and get everything processed by then, it will have been a pretty darned successful program," he said.
No room for error
That makes this weekend the time to trade an old clunker, but only if you can do it right. The Transportation Department has warned car dealers that it won't accept transactions that are missing any documentation; all paperwork must be submitted by the Monday deadline. That means, in addition to the trade-in vehicle, you'll need to have with you:- Personal identification, such as a driver's license.
- The title of the trade-in vehicle.
- Proof of continuous insurance for the past 12 months. You may use consecutive proof-of-insurance cards or a letter from your insurance agent on company letterhead.
- Proof of continuous registration for the past 12 months.
Ultimately, responsibility for compliance rests with dealers. Dealers may not ask buyers to put down deposits in case vouchers are rejected, and they're not allowed to ask buyers to assume legal responsibility.
The program works like this: Dealers let you know whether your trade qualifies, credit the amount to your down payment, then apply for the voucher. They then must disable your old car's engine and restamp its title.
Only new vehicles -- domestic or imported, purchased or leased -- qualify for purchase, and they must have sticker prices under $45,000.
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Clunkers program endingThe Obama administration hopes for a smooth ending to the program that spurred auto sales but also created headaches for many dealers, reports CNBC's Phil LeBeau. (Aug. 21)
Consumers can see the complete list of rules at Cars.gov, and buyers can report suspicious dealer activity to the government by calling 1-866-CAR-7891.
There's a catch
The vouchers aren't a panacea for buyers.The rush on car lots since July has left stocks of small, fuel-efficient cars bare. To help address that issue, administrators changed the rules last week to allow dealers to sell cars that are in the pipeline but not yet on sales lots. As long as a dealer can show you a vehicle identification number, or VIN, you can take delivery after the deadline. Your clunker, however, must be handed over immediately.
Car buyers must remember that their trades will be scrapped and have no value to the dealership above the amount of the voucher. A 10-year-old Lexus might qualify for the biggest ($4,500) voucher, but it's almost certainly worth more than that on the open market.
So, Rule No. 1 for buyers intent on using the program: Check and double-check the value of the vehicle you want to ditch. Almost any road-worthy vehicle is worth $1,000 and typically twice that if it's an import.
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