Jun 29, 2009

'Cash for Clunkers': Details, Details, Details

Some say the devil is in the details; others would have you believe that God is in the details. When it comes to the details of the recently approved national “Cash for Clunkers” program, officially titled the Consumer Assistance to Recycle and Save Act, you might be more tempted to believe the former rather than the latter. Of course, not all of the details are even available yet, because one of the requirements of the legislation is that within 30 days the government must establish a Web site that includes guidelines for determining eligible trade-ins, details on participation and a list of new vehicles that meet program requirements. While that is being assembled, here are some of the lesser-publicized details we do know:

Not every car dealer is required to participate in the program, but it is expected that most will. Once in the program, dealers must accept all governmental vouchers and turn over all vehicles they take in as part of the program to a scrappage facility. Certification of scrappage is yet to be worked out, but those facilities can then sell parts from the scrapped “clunkers” with the exception of “drive trains” (engine-and-transmission combinations) and engine blocks. Consumers don’t get the voucher; the dealers get it as an electronic payment within 10 days after the sale. You also don’t have to report the voucher as income on your income tax form.

Besides doing all the administrative work for the program, dealers must reveal to buyers the “true” value of their prospective clunker. (It doesn’t make any sense to put a car worth more than $4,500 into the program, since that figure is the maximum you can receive from the government for it.) Dealers can’t charge an additional fee for the use of the voucher, but they can keep up to $50 of the money they receive from the scrappage facility for the scrapped vehicle.

The program is scheduled to crank up on July 1, although it is likely that there will be a few kinks in the procedure early on. The National Highway Traffic Safety Administration is responsible for running the program, and it has been authorized to spend $50 million of the program’s $1 billion price tag to do so. Cash for Clunkers is currently slated to conclude on Nov. 1, 2009.

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