United States To Have Cash For Clunkers Vehicle Program

The United States is expected to implement an incentive for turning in old vehicles for new ones of higher mileage. The program, being called the “Cash for Clunkers” program, will pay up to $4,500 towards a new vehicle. The program is expected to be signed by President Obama soon, as it was passed by the Senate this past week.

The program is being targeted as a way to improve mile per gallon rates for many consumers (and therefore the environment) while helping out the suffering American car companies. The bill is providing $1 billion towards the Clunker program from July through November. Car sales are expected to total around $4 billion for the same time period.

Since U.S. auto sales are down 34 percent from last year at this time, the car companies have lobbied for such incentives from the government. Even with the program, car companies are expecting to only sell 10 million vehicles in 2009 as opposed to 16 million in 2007.

In order to receive a voucher, consumers must trade in a vehicle currently getting low mileage and of an older model. The program is aimed at models built in the 1980s etc. rather than newer models in order to get so-called gas guzzlers off the roads.

For cars, consumers trading in a car getting 18 mpg or less would get $3,500 if they purchased a vehicle getting at least 22 mpg. A $4,500 voucher would be given to a consumer trading in a vehicle getting 10 mpg less than the newly purchased vehicle.

Vans, pickup trucks and SUVs having a mpg less than 18 would receive a voucher for $3,500 for a new vehicle maintaining at least 2 mpg more. The $4,500 voucher would go to a consumer who purchased a new vehicle getting at least 5 mpg more than their old one.

The vouchers could go towards new vehicle purchases or leases, however the new vehicle must cost less than $45,000. The traded in old vehicles would be crushed or shredded.