Cash for Clunkers Program

The Cash for Clunkers Program just kicked off this Monday and the $1 billion auto sales incentive program is proving to be a win-win deal for everyone involved in it. For those who do not yet know about it, here is how the program works:

Approved last month, the program known officially as the Car Allowance Rebate System offers rebates of $3,500 to owners who relinquish cars rated at less than 18 miles per gallon to purchase ones getting at least 22 m.p.g. If the new vehicle gets at least 10 m.p.g. more than the trade-in, the rebate is $4,500. For SUVs, minivans and pickups, a 2 m.p.g. improvement is required, while a 5 m.p.g. gain nets the full rebate.

The government rebate is taken off the price after manufacturer discounts and incentives are applied.

Reimbursement will be wired directly to the dealers, who must show proof that the clunkers have been taken off the road permanently by being “crushed or shredded,” according to the legislation.

The program is expected to run four months, or until the $1 billion is depleted. The National Highway Traffic Safety Administration has until July 24 to issue the final regulations, putting most transactions on hold until Friday.