Meltdown 101: The cash for clunkers program

— Got an old gas guzzler in the garage? Car shoppers can take advantage of new government incentives worth $3,500 to $4,500. Owners can scrap their clunker in exchange for a new, more fuel-efficient vehicle, and lop off thousands of dollars from the sticker price. Congress approved the "Car Allowance Rebate System," or "CARS," program last month to boost auto sales and attempt to retire some inefficient cars and trucks. Here's a look at the program:

Q: Which vehicles qualify?

A: Cars and trucks must be 1984 models or newer to be eligible for a trade-in rebate. They must get 18 miles per gallon or less in combined highway/city rating – based on the "Estimated New EPA MPG" ratings available at . The vehicle needs to be drivable, insured and licensed for at least a year – so forget about buying a clunker this summer for $500 and "flipping" it through the program. Violators face penalties if they submit false information.

Q: How do I qualify for the incentives?

A: For passenger cars, consumers can get $3,500 if the new vehicle gets at least 4 mpg more than the trade-in and $4,500 if the new vehicle gets at least 10 mpg more than the trade-in. For sport utility vehicles, pickup trucks or minivans, owners can get a $3,500 rebate if the new vehicle gets at least 2 mpg higher than the old vehicle. The rebate improves to $4,500 if the new vehicle gets at least 5 mpg higher than the trade-in. Large work trucks weighing at least 6,000 pounds can also qualify for rebates of $3,500 to $4,500.

Q: Can I buy any kind of vehicle through the program?

A: This won't subsidize a new Ferrari. The new vehicle needs to meet the fuel-efficiency requirements and have a manufacturer's suggested retail price of less than $45,000. It can be a domestic or foreign model. Used car purchases are not allowed under the program.

Q: Can I get the clunker rebate plus the value of my trade-in?

A: No.

Q: My old car or truck is worth more than $4,500. Should I use this program?

A: Probably not. The program essentially guarantees a minimum trade-in for a vehicle. So someone with an old beater valued at $1,000 that meets the mileage requirements stands to gain the most. Any prospective buyer with an old car worth more than $4,500 should probably trade it in for a new one. But many automakers and dealerships are offering additional incentives, so it's worth talking to your dealer.

Q: What happens to my old vehicle?

A: The trade-in vehicle will be scrapped. Dealers are required to use a government-approved salvage facility for the vehicle disposal. Vehicles need to be shredded or crushed within six months.

Q: What do I need to do to participate?

A: Go to your local car dealer. Dealer registration for the program began Friday. Owners need to bring their vehicle, title, proof of registration and proof of insurance.

Q: How will this program affect other dealer and manufacturer incentives?


