Cash For Clunkers Program Explained Last week, the government launched a $1 billion program to get consumers to part with their gas-guzzling cars and trucks and buy more fuel-efficient vehicles. The so-called Cash for Clunkers Program is an attempt to stimulate auto sales. David Shepardson, a reporter for the Detroit News, explains how the system works.
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Cash For Clunkers Program Explained

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Cash For Clunkers Program Explained

Cash For Clunkers Program Explained

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That old car might be worth money - it's not just a slogan for junkyards. Today, the government's billion-dollar Cash for Clunkers Program begins. Officially, it's called the Car Allowance Rebate System - CARS, get it? In exchange for your old clunker, you can get up to a $4,500 credit for a new car. There are lots of rules, though, and David Shepardson, a reporter for the Detroit News, is here to run through them. Hi, David.

Mr. DAVID SHEPARDSON (Reporter, Detroit News): Oh, hi, Madeleine.

BRAND: So definition of a clunker is what, what would qualify?

Mr. SHEPARDSON: Well, it's got be a car that's up to 25 years old and generally gets no more than a combined city/highway 18 miles per gallon.

BRAND: How do you know if that's what you have?

Mr. SHEPARDSON: Well - a good question. Usually you can go to the sticker but in 2008, the EPA changed the rules for how they measure miles per gallon and made it a little tougher, reduced the average miles per gallon by about 10 percent. So you go to a government Web site like or, and you type in your model and vehicle, and it will tell you whether you're eligible.

BRAND: Okay, so let's say you are eligible and you want to turn in your car, what do you do next?

Mr. SHEPARDSON: Well, you go to the dealership, you find a new car you want to buy. And most of the experts suggest: Make the deal first with the dealer, and then tell him that you've got, him or her, that you've got a clunker you want to trade in.

BRAND: David, you said when someone is going car shopping, they should go into the dealership and make the deal, shop around, and then reveal that they've got a clunker to turn in. Why?

Mr. SHEPARDSON: The thinking from some of the consumer Web sites has been that if you, you know, reach the best possible deal with the dealer first and then say, I've got a clunker I want to trade in, that the dealer might be less willing to give you as good a deal if you tell them upfront that you're going to use the program.

BRAND: So, you might get a rebate from the dealer on top of the Cash For Clunker's money.

Mr. SHEPARDSON: Well, you should - you'll definitely get an additional, given how sales are really struggling. I mean, every automaker, just about, is offering some hefty incentives - you know, cash back, zero percent financing. And you will certainly get that on top of whatever Cash for Clunkers rebate you're eligible for.

BRAND: And you have to get a car that has a certain gas mileage, right?

Mr. SHEPARDSON: Correct. To get the full $4,500 credit, you need a vehicle that's 10 miles per gallon more efficient than your current model. Between four and nine miles per gallon more efficient, you get a $3,500 credit. You also have to have owned the vehicle for the last year. You can't go on eBay and buy a car to trade in. And it has to have been insured for the last year.

BRAND: Are there any scams out there that people should be aware of and wary of?

Mr. SHEPARDSON: Well, Secretary of Transportation Ray LaHood said there were already people out there trying to, you know, con people out of - into thinking that there are other Web sites that might be appropriate to use. He said make sure you go to, the government site. Don't give anyone your Social Security number or other personal information. So really, if you go to this government Web site, one, you can type your dealer's name in to see if they're actually taking part in the program, and you should - like anything else - be leery of an email, you know, suggesting you take part that way.

BRAND: And are all dealers are taking part in this?

Mr. SHEPARDSON: Just about all the - little more than 20,000 new car dealers in the United States, and the program registration officially began Friday. And there are already about 16,000 dealers registered. So really, in the next few days, you'd expect the vast majority of the remaining dealers to take part.

BRAND: So bottom line, is this a good deal for consumers?

Mr. SHEPARDSON: Well, it is if your vehicle is worth less than $4,500. I mean, because remember when your - this car is being junked. The car dealer actually has to destroy the engine by draining the oil, pouring a substance into it and running it, which will not allow it to run anymore. So, if you - if the car is worth more than $4,500, or you think you can sell it for some higher amount, then you might want to go that route.

BRAND: David Shepardson is a reporter for the Detroit News. We've been talking about the Cash for Clunkers Program, which begins today. David, thank you.

Mr. BRAND: Thank you, Madeleine.

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