You’ve probably heard about the Cash for Clunkers program, which is now being referred to as the Car Allowance Rebate System. It’s a part of the Consumer Assistance to Recycle and Save Act of 2009.

The stated aim of the act is:

To accelerate motor fuel savings nationwide and provide incentives to registered owners of high polluting automobiles to replace such automobiles with new fuel efficient and less polluting automobiles.

That doesn’t sound too bad, but there are some things you should know about the program, chief of which are that:

  1. Not all cars qualify as “clunkers”.
  2. You have to buy or lease a brand new car that meets certain conditions in order to take advantage of the program.

For details on how the program works and what vehicles qualify, visit the web site put out by the U.S. Department of Transportation. Keep in mind though that they’re still ironing out the regulations relating to the program, so the final details won’t be available on that site until late July 2009.

Other items of interest:

  • If your car is accepted into the program, it will be “crushed and shredded” after its title is transferred to the United States. (Apparently they’re serious about keeping the clunkers off the road.)
  • The $3,500/$4,500 vouchers will not be considered as income for the purchaser.
  • Your trade in must be drivable and have been “continuously insured consistent with the applicable State law and registered to the same owner for a period of not less than 1 year immediately prior to such trade-in”. (So no going out and buying a clunker in hopes of participating.)
  • $4,000,000,000 was appropriated to the Secretary of Transportation to carry out this Act. (That’s a lot of zeros…)

Finally, remember that if you do buy a new car, negotiate the purchase price based on the car itself, not on payments, trade in values, or programs like this one in order to try to get the best deal.