The Cash For Clunkers Program

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It seems like it's all over the news these days. Turn on a TV to one of the many competing news services, and gray-faced pundits or helmet-haired anchors will be talking in depth about the government's Car Allowance Rebate System (CARS), or, as it's colloquially known, the "Cash for Clunkers" program. And if you change the channel, you're likely to see a car commercial advertising how inexpensive a car is under the program. At this point, though, you may be wondering what the program actually is, and how it works.

The Cash for Clunkers program is a government scrap program which has a dual purpose: simultaneously increasing the fuel efficiency of cars on the road and helping to give a boost to the faltering US automobile companies. The program started on July 1, but the first claims were not finished being processed until July 24. But by July 30, the $1 billion Congress had allotted for the program had already been exhausted, well before the end date of November 1, 2009. The program was quickly extended with an additional injection of $2 billion, which was signed into law by President Obama on August 7.

The Government has been happy with the results so far, claiming an ongoing victory with the program. Estimates after the first week showed that the average fuel efficiency of trade-ins was 15.8 miles per gallon, while the average fuel efficiency for new vehicles purchased was 25.4 mpg. This change represents an increase in fuel efficiency of over 60%. As of August 11, the most traded-in vehicle was the Ford Explorer with the four-wheel drive package, while the most purchased car was the Toyota Carolla.

However, the program has not been without its critics. According to a study released by Edmunds, the Government has been deliberately obfuscating the statistics by counting different versions of the same model as different vehicles, meaning that the Ford Escape with a four-wheel drive package was counted as a different model than the regular Ford Escape package. According to Edmunds, the most commonly purchased vehicle was in fact the Ford Escape crossover SUV.

The Government estimates that as of August 11, over 316,000 old and inefficient vehicles have been turned in for rebates, and that quality and efficiency of cars on the road continues to go up.

Purchasing a new car is a serious financial decision. If you'd like to learn more about financial and bankruptcy law, visit

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Joseph Devine

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The Cash For Clunkers Program

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This article was published on 2010/03/27