Cash for clunkers

April 5, 2009 7:55 AM

Can I buy a old car now and then claim a credit under the (seemingly likely to pass) incentive scheme to buy a new one?

Talking about the car industry on Monday, President Obama said: "Finally, several members of Congress have proposed an even more ambitious incentive program to increase car sales while modernizing our auto fleet. And such fleet modernization programs, which provide a generous credit to consumers who turn in old, less fuel-efficient cars and purchase cleaner cars, have been successful in boosting auto sales in a number of European countries. I want to work with Congress to identify parts of the Recovery Act that could be trimmed to fund such a program, and make it retroactive starting today."

I can't find any more details about this program. Can I buy a car now for a couple of hundred dollars and then turn that in for a credit to buy a new one in a couple of months? What could be the catch?

posted by TrashyRambo to shopping (3 comments total)

There isn't any actual regulation/legislation about such a credit yet. When there is, it will almost certainly limit the credit to the original purchase price of the car you're trading in, specifically to prevent people from tossing $100 junkers for a $1000 (or whatever it is) credit.
posted by Tomorrowful at 8:30 AM on April 5

We have such a program going on in Germany at the moment. Over here, you get a government grant of EUR 2,500 if you buy a new car (less than one year old) and scrap the old one, but only if the old one is at least nine years old and you have proof that you owned it for at least one year. There is no rule about what you paid for the car when you bought it, though, so theoretically it's possible to make money - but only if you bought the old car at least one year ago.

By the way, the program has been really popular, so the prices of new and almost new cars has gone up, and there are even long waiting periods for some models (especially compact cars), and right now it's not clear if the government is going to continue the program until the end of the year because the money they set aside for it has almost been spent completely - so far, a million people have applied for the EUR 2,500 grant.

Of course, there's no way to know how such a program would work in the US, so take this as a data point. FWIW, Obama had a chat with chancellor Merkel while visiting Germany a few days ago.
posted by amf at 8:50 AM on April 5

Clunker buy backs in exchange for pollution offsets have been taking place in California for a couple of decades now and I would hope the feds take a look at how it's been administered here. To prevent an abuse of the process, the seller in California was required to produce proof the vehicle has been registered in his/her name for over a year and the vehicle must be driven in rather than towed as proof of driveability.

Here's an old NYT article about one of Unocal's many buybacks
posted by buggzzee23 at 10:40 AM on April 5