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Cash for Clunkers

Cash for Clunkers

What Is Cash for Clunkers?

Cash for Clunkers was a U.S. government program that gave financial incentives to vehicle owners to trade in their old, less fuel-effective vehicles and buy more fuel-productive vehicles. The purpose of the program was principally to act as an economic stimulus during the Great Recession by giving the population monetary incentives to buy new cars, in this manner expanding automobile sales, while simultaneously lessening carbon emissions by supplanting old vehicles with new, fuel-proficient ones.

Figuring out Cash for Clunkers

The Car Allowance Rebate System (CARS) was endorsed into law by President Obama in June 2009 with for the most part bipartisan support in Congress. The law was administered by the National Highway Traffic Safety Administration (NHTSA). Vehicle dealers presented the required data to the NHTSA for the benefit of qualified new vehicle buyers.

The proper name for the program was the Car Allowance Rebate System (CARS). The CARS program gave individuals who qualified a credit of up to $4,500, contingent upon the vehicle purchased.

Requirements for Cash for Clunkers

The program started in July of 2009. To fit the bill for the credit, a traded-in utilized vehicle needed to meet the accompanying criteria:

  • Be under 25 years of age
  • Have an EPA-evaluated fuel proficiency of under 18 miles for each gallon
  • Be in drivable condition

The traded-in vehicle was required to be rejected, have the engine delivered unusable, and have its body squashed or destroyed.

Likewise, the new vehicle being purchased needed to have an EPA-evaluated fuel proficiency of in excess of 22 miles for each gallon. The program ended Aug. 24, 2009.

The rules for trucks were more confounded.

Light-and standard-obligation model trucks, including SUVs, vans, and pickup trucks had the accompanying boundaries:

  • The new truck must have a fuel-productivity mileage rating of 18 mpg or more.
  • The new truck must have essentially a two mpg higher rating to fit the bill for the $3,500 coupon or possibly five mpg higher for the $4,500 credit.

For heavy-obligation trucks:

  • The new truck must have a rating of 15 mpg or more.
  • The new truck must have no less than one mpg higher rating to get the $3,500 coupon and somewhere around two mpg higher to meet all requirements for the $4,500 credit payment.

Benefits and Disadvantages of Cash for Clunkers

Supporters of the program have contended that the program was a triumph since it gave a stimulus to the economy and supplanted many fuel-wasteful vehicles with more fuel-productive vehicles that made less pollution. The program eliminated north of 677,000 fuel-wasteful cars from the road.

Nonetheless, the program has been censured. The freedom supporter Mises Institute called the program an illustration of the "broken windows" fallacy, which holds that spending makes wealth. Analysts with partly faulted the program for a shortage of pre-owned cars. While the program was partly intended as a stimulus for domestic car manufacturers, just around 49% of new vehicles purchased were manufactured in the U.S.

The majority of vehicles traded in the Cash for Clunkers program were trucks, at 84% of total vehicles traded. The majority of vehicles purchased were passenger cars, at 59% of total vehicles purchased.

The National Bureau of Economic Research stated that the program's positive effects were unassuming, brief, and that a large portion of the transactions it prodded would have happened at any rate. A study by Edmunds claims that the program prodded a net 125,000 vehicle purchases, costing taxpayers an average of about $24,000 per transaction.

Moreover, most logical analysts accept that the benefit to the climate was irrelevant basically in light of the fact that the program brought about an exceptionally high cost for every ton of CO2 stayed away from.


  • Provided stimulus to the economy

  • Replaced fuel-inefficient cars with fuel-efficient ones


  • Created a shortage of used vehicles

  • Only 49% of new vehicles were manufactured in the U.S.

  • Created more hazardous material through metal shredder waste

  • Costly way to reduce carbon emissions

## Cash for Clunkers FAQs ### Will There Be Another Cash for Clunkers Program?

There has been some discussion under the Biden administration for a program like Cash for Clunkers that would be part of Biden's overall infrastructure plan. Congressperson Chuck Schumer accepts the plan could incorporate billions of dollars allocated to a program to urge Americans to switch from gas fueled vehicles to electric vehicles. The program would probably swap out engines for batteries.

What Is the California Version of Cash for Clunkers?

California's comparable plan is called "Customer Assistance Program Vehicle Retirement." It offers eligible vehicle owners $1,500 for resigning every vehicle, contingent upon income qualification. Those that don't meet the income requirement will be given $1,000.

Is It Worth Donating a Car to Charity for the Tax Deduction?

It tends to be worth giving a vehicle to charity for a tax deduction, contingent upon the factors. As a rule, you can claim a deduction for the exact amount that a charity sold your vehicle for at auction. In the event that the charity sells it at a precarious discount or keeps the vehicle itself, then, at that point, you might deduct the fair market value of the vehicle. It's best to work with a tax advisor to check whether it's worth it to give your call or sell it, contingent upon the vehicle itself.

The Bottom Line

While the program brought about diminished carbon emissions, a Brookings Institution study proposes that there are more cost-compelling policies for decreasing emissions. The program regulations required the traded-in vehicle to be squashed or destroyed. Metal shredder squander has been found to contain hazardous waste.


  • Pundits of the program say that it made a shortage of pre-owned cars, expanding utilized vehicle prices and hurting income earners. They likewise claim that it was heavy on taxpayers and inclined toward foreign manufacturers.
  • The program ended in November 2009 after the $3 billion allocated for it had been exhausted.
  • To meet all requirements for the credit, a traded-in vehicle must be under 25 years of age, have an EPA-evaluated fuel productivity of under 18 miles for each gallon, be in drivable condition, and be rejected.
  • Cash for Clunkers was a government program that gave financial incentives to vehicle owners to trade in their old, less fuel-productive vehicles for more fuel-proficient ones.
  • Supporters contend that the program invigorated the economy and reduced pollution.