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Cash for Clunkers questions answered

Cash for Clunkers questions answered

(Cars) Permanent link

Last week, the feds injected another $2 billion into the "Cash for Clunkers" program. Cars are selling and the Attorney General’s Office is receiving questions from consumers about just how much dealers are supposed to knock off of their trade-in. Hopefully, this helps clear up some of the confusion.

Officially known as the Car Allowance Rebate System, or CARS, the program was created to boost new-vehicle sales and to take gas-guzzlers off the road. Consumers can receive a credit of either $3,500 or $4,500 toward the purchase of a new vehicle when trading in a car less than 25 years old that gets 18 mpg or less. The amount you get depends on your “clunker” and what you buy. Remember, the credit only applies to purchases of new cars, not used, and not all trade-ins qualify. You can find out if yours does by visiting the Web site:

Participating new car dealers will apply the credit, reducing the price you pay for your purchase or lease. The government will reimburse the dealer. Or, at least that’s how it is supposed to work.

Dealers have had problems filing the paperwork, in part because of Web site freezes due to multiple dealers trying to file claims at the same time.

Some dealers are requiring customers to sign an “addendum” to their contract that states that if the government can’t pay, the customer will have to make up the difference. In other words, you’ll be asked to write a check for another $4,500 if the dealer doesn’t get his dough. If you made a Cash for Clunkers deal and the dealer is now asking for more money, please contact our office.

In case you’re curious what happens to that “clunkers,” they’re not allowed back on the road. As Time explains:

"In order to receive federal reimbursement for the subsidy consumers get for trading in their cars, dealers must first destroy the engine. One common method is to drain the car's oil and flood the engine with sodium silicate, or liquid glass. Dealers then turn the car on and rev the engine to let the solution harden. In just a few minutes, the car becomes inoperable.  … Once the engine is dead, a recycling lot [salvage yard] can take possession of the car. From that time, it has 180 days to sell the pieces of the car that retain some value. Even though the engine's a lost cause, everything from the scrap metal to the hubcaps is available to buyers. When the resale period is up, any leftover parts must be destroyed, and the government is notified that the car is gone for good."

One last thing, steer clear of so-called “Cash for Clunkers” Web sites that ask for personal information such as your Social Security number or bank account so they can “register” you for the program. They’re scams.

Posted by Kristin Alexander All Consuming Blog Moderator at 08/10/2009 05:59:16 PM | 

I have a gripe about the cash for clunkers program. I have a 1984 Ford F250 truck that gets about 12 mpg. If I were to get the $4500 credit, I would probably buy a new truck...probably getting >25 mpg. I hear because it was made more than 25 years ago, it doesn't qualify. WHY? It sure makes sense to me that I would be a great candidate to get the credit. Just think of the gas I would save and the US wouldn't pay OPEC.
Posted by: Lynn Hagenbuch ( Email ) at 8/11/2009 12:12 PM

I believe our elected officials are doing the best they can but why would foreign cars be an option for purchases when our country is struggling to make ends meet and Americans are loosing jobs. Wouldn't it make more sense for only owned and operated by US citizens like Ford, GM, and Chrysler? The big question for our Government is how will we have any tax money if there is nothing to tax. We need to buy American and make American. No more made in China buy American. I refuse to buy made in China when we have citizens loosing jobs.
My second question how will be ever pay off this 9 trillion dollar deficit? What is being held for collateral? Our land or our lives? Maybe both? What is going on? Can't somebody solve these problem? It appears not. What on earth is going on?
Posted by: John M. Gridley ( Email ) at 8/21/2009 3:24 PM

I bought a 09 Kia on Aug 1st from [EDITED - NAME OF DEALER] using a 98 Suburban as a clunker that the dealer says qualified. 3 weeks later they say it doesn't qualified and they have cashed my personal check and want to rework the deal. Is this good business practice? They even said it was their fault! [BLOG MODERATOR'S RESPONSE: Please file a complaint with our Consumer Resource Center. Our office may be able to provide informal mediation to resolve your dispute. You can file your complaint online at - Kristin]
Posted by: Arno Groesbeck ( Email ) at 8/25/2009 10:42 AM

I purchased a new car signed everything the car is sitting at my house two days ago. What are the stipulations on taking it back. I only bougth a new car to take advantage of the cash for clunkers and it didn't happen. Please respond asap or tell me where I can get this information. I also have a gas gusler 84 truck that I would of traded in as well.
Posted by: Maria Dahlgren ( Email ) at 8/25/2009 11:56 AM

Maria, It’s not clear from your comment whether you traded in a car. 1) If you simply purchased a new car with no trade-in under the Cash for Clunkers program, then you aren’t eligible for a rebate under that program. 2) If, however, the dealer accepted your trade-in and told you that you were eligible for a rebate that you either didn’t receive or are now being asked to pay back, that is something you should indicate when you file a complaint with our Consumer Resource Center. Complaints can be filed online at 3) Please note that there is no “cooling off” period or refund right when you purchase a car in Washington. Assuming the transaction was completed legally, then you are obligated to make all payments on your contract. Sincerely, Kristin
Posted by: Kristin Alexander, All Consuming Moderator ( Email ) at 8/26/2009 4:01 PM

I used the clunker trade, in middle of July they said my 1988 Chrysler Fifth Avenue qualify for 4500 on a new Ford Focus, 17 miles average , 27 on the Focus. I sighed a contract, down payment, got my car on 7-24-09. Three days later they called and said I owed them another 1000, my car only qualified for 3500 they said the government had changed the milage ratings for my Chrysler. I was informed that I would not get a title unless I paid. I had only one option if I wanted to drive the car. What are my recources, the government caused the problem, dealers couldn't check 7-23 or 7-24 to see if there were changes, the lines were all tied up. Last note my old Chrysler was lucky to get 17 on the highway. Where do I go to get my clunker rebate I was entitled to on 7-24-09 [BLOG MODERATOR'S RESPONSE: Randy, please file a complaint with our Consumer Resource Center.]
Posted by: Randy Lobner ( Email ) at 10/29/2009 9:13 AM

I purchased a car under this program and later found out that I was supposed to receive the scrap value of my "clunker." The care dealer tells me that they haven't been getting enough for the scrap value to cover the paperwork, and that I signed over rights to them. Yet I see reports that other dealers are giving checks to people, averaging about $250 per car. What is the real story?
Posted by: Jerry Rhodes ( Email ) at 12/18/2009 12:11 PM

RE previous message, see:
Posted by: Jerry Rhodes ( Email ) at 12/18/2009 12:13 PM

Hi Jerry, According to the Cash for Clunkers Web site (, “The law requires your trade-in vehicle be destroyed. The dealer must disclose to you the scrap value of your vehicle. The dealer is entitled to keep up to $50 of the scrap value for administrative fees. You are entitled to negotiate about who keeps the remaining scrap value. For example, you may use that money toward the price of your new car separate from the CARS credit.”

If you feel you were misled, please file a consumer complaint with our office. (I'm assuming you live in Washington State.) Note that the news release you linked to is out of Oregon. If you live in Oregon, you should file your complaint there.
Posted by: Kristin Alexander, ALL CONSUMING BLOG MODERATOR ( Email ) at 12/21/2009 5:31 PM

All the additional funding for the cash for clunkers is welcome, an extension or permanency of the measure to ensure that all gas guzzlers will be off the road for good is going to be great for the environment.
Posted by: Resale Rights ( Email ) at 12/29/2010 4:42 AM

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