Cash for Clunkers
The agreement provides $1 billion to provide consumers with $3,500 or $4,500 vouchers when they choose to trade in an old vehicle for one with higher fuel efficiency. The vehicle turned in must be scrapped.
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Details on Program
Under the program, trade-in vehicles, 1984 models or newer, must have average fuel economy of no more than 18 miles per gallon. And the new car or truck must get better gas mileage than the one that was scrapped.
The payoff grows depending on the difference in the fuel efficiencies of the old and new cars. For instance, a new car getting at least 4 more miles per gallon than the old car will be eligible for a $3,500 voucher. A new car getting at least 10 more miles per gallon would get a $4,500 voucher.
To guarantee vehicles are actually roadworthy — and not just sitting on cinder blocks — trade-ins must be registered and insured to the same owner for at least a year.
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More Details on Program
The one-year trade-in program would start upon enactment of the bill. Vehicles made before model year 1984 would be ineligible for the rebate. The compromise also reduced a proposed fine for violating any provision of the legislation, to $15,000 from $25,000.
Under the bill, consumers could receive a voucher worth as much as $4,500 for the purchase or lease of a new, fuel-efficient vehicle upon trading in the less-efficient passenger car, SUV or truck.
To receive a voucher of $3,500, the consumer must buy a new car that gets at least four more miles per gallon. To receive a voucher for $4,500, the new car must have a rating at least 10 mpg higher.
For a light-duty truck or SUV, the old truck must have a rating of 18 mpg or less. To receive a voucher of $3,500, a consumer must purchase a new vehicle rated at least two mpg higher. To receive a voucher for $4,500, the new vehicle must get at least five mpg more.
Large vans, large pickups and work trucks also are eligible for the program, under differing requirements.
The bill would require that trade-ins be “crushed or shredded,” but it would allow the person responsible for the crushing or shredding to sell vehicle parts other than the engine block or the drive train.
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Program Details from Bill Text
(b) Qualifications for and Value of Vouchers.-A voucher issued under the Program shall have a value that may be applied to offset the purchase price or lease price for a qualifying lease of a new fuel efficient automobile as follows:
(1) $3,500 VALUE.-The voucher may be used to offset the purchase price or lease price of the new fuel efficient automobile by $3,500 if-
(A) the new fuel efficient automobile is a passenger automobile and the combined fuel economy value of such automobile is at least 4 miles per gallon higher than the combined fuel economy value of the eligible trade-in vehicle;
(B) the new fuel efficient automobile is a category 1 truck and the combined fuel economy value of such truck is at least 2 miles per gallon higher than the combined fuel economy value of the eligible trade-in vehicle;
(C) the new fuel efficient automobile is a category 2 truck that has a combined fuel economy value of at least 15 miles per gallon and-
(i) the eligible trade-in vehicle is a category 2 truck and the combined fuel economy value of the new fuel efficient automobile is at least 1 mile per gallon higher than the combined fuel economy value of the eligible trade-in vehicle; or
(ii) the eligible trade-in vehicle is a category 3 truck of model year 2001 or earlier; or
(D) the new fuel efficient automobile is a category 3 truck and the eligible trade-in vehicle is a category 3 truck of model year of 2001 or earlier and is of similar size or larger than the new fuel efficient automobile as determined in a manner prescribed by the Secretary.
(2) $4,500 VALUE.-The voucher may be used to offset the purchase price or lease price of the new fuel efficient automobile by $4,500 if-
(A) the new fuel efficient automobile is a passenger automobile and the combined fuel economy value of such automobile is at least 10 miles per gallon higher than the combined fuel economy value of the eligible trade-in vehicle;
(B) the new fuel efficient automobile is a category 1 truck and the combined fuel economy value of such truck is at least 5 miles per gallon higher than the combined fuel economy value of the eligible trade-in vehicle; or
(C) the new fuel efficient automobile is a category 2 truck that has a combined fuel economy value of at least 15 miles per gallon and the combined fuel economy value of such truck is at least 2 miles per gallon higher than the combined fuel economy value of the eligible trade-in vehicle and the eligible trade-in vehicle is a category 2 truck.
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