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After the “Great Recession”, the American federal government was looking for a way to stimulate auto sales in the United States while benefiting the environment in the process. The resulting law was called Cash for Clunkers, a vehicle buy-back program that was designed to take old, inefficient vehicles off the road and replace them with newer, more environmentally-friendly ones.
Cash for Clunkers: An Overview
According to Investopedia, Cash for Clunkers was a program created by the U.S. government, intended to provide incentives to citizens who traded in their old car for a new car that's more fuel-efficient. This may also be where the cash for cars term came from.
Officially known as the Car Allowance Rebate System (CARS), the program was a $3 billion effort to put safer, cleaner, and more fuel-efficient cars on the road while also stimulating car sales to benefit the reeling domestic auto industry after the Great Recession.
The program ran from July 2009 until late August 2009, after having been signed into law by President Obama. It was administered by the National Highway Traffic Safety Administration. Initial funding set aside by the law totaled $1 billion, but the program was so popular that the budget was exhausted very quickly. Congress approved another $2 billion shortly after the program started.
The Obama administration put an end to the program in August 2009, with it noting over 650,000 recorded vehicle sales and around $2.77 billion in rebates.
Criteria for Trade-In Vehicles
CARS gave qualified buyers a credit of up to $4,500, depending on the vehicle they were purchasing, and dealers were responsible for submitting the paperwork for credit. In order to qualify, the vehicle being traded in had to be less than 25 years old, had to be in running condition, and had to have EPA-estimated fuel economy ratings of less than 18 miles per gallon. The new vehicle purchased had to be rated at more than 22 miles per gallon.
What Happened to the Trade-In Vehicles?
To ensure that the vehicles being traded in weren’t resold, the law required that they be scrapped. The engine had to be rendered unusable and the body had to be crushed. In what sounds like a horror movie for car people, motor oil was drained from the engines and replaced with a sodium silicate solution. The engine was then started and run until the solution heated to the point of solidifying inside. This made the engines completely useless, even as scrap.
Other parts could be sold as scrap for reuse, such as the transmission and suspension components, but the body of a vehicle traded in under the CARS program had to be crushed within six months of the initial transaction.
What Kinds of Vehicles were Scrapped?
Even though the intention was to remove old, inefficient vehicles from the road, some impressive machinery made its way onto the list of trade-ins. Some of the rare vehicle scrapped included:
- GMC Typhoon
- TVR 280i
- Maserati Biturbo
What Were the Results of the Program?
On the Economy
One of the stated goals of the stimulus program was to boost auto sales at a time when many manufacturers were still reeling from the huge economic downturn just a few years earlier. Once the results were tallied, domestic automakers, including Detroit's Big Three, reported modest success stories. GM and Chrysler had slowed their previously steady sales declines, and Ford sales went up for the first time since 2007.
On the Environment
In terms of vehicle fuel economy only, the program was a success. A study by the DOT found that the average fuel efficiency of vehicles being traded in was 15.8 mpg, while the average fuel economy of new vehicles sold under the program was 25.4 – a 61% improvement.
That said, the overall environmental legacy of the program is mixed. Because the law required that many (normally reusable) parts of the vehicle be completely scrapped, the amount of waste generated by the program was quite high.
Is Cash for Clunkers Coming Back?
As far as anyone knows for now, no. California runs a similar program that awards at least $1,000 to people trading in old vehicles that meet certain criteria. If you live outside of the state, or your vehicle hasn’t been registered there for at least the last two years, you’re out of luck. Occasionally, other states will roll out programs that are close to California’s, but there are no nation-wide plans for another Cash for Clunkers program at this time.
What are the Other Options?
Even if you took advantage of the program when it was in effect, there’s a good chance that the vehicle you bought then (if it’s still running) is on its last legs. If you don’t live in California, what are your options? Is it still possible to get cash for junk cars? It turns out there are several ways to get paid for a barely running or junk car.
You can sell your car online to several junk car buying services that take most of the hassle out of getting rid of the vehicles. Most of the time, they offer more than car dealers' trade in value (if there is one), and many junk car buyers will even throw in free towing as part of the deal.
Some of the benefits include:
- More money than the dealership's trade in value or junkyard scrap value
- The vehicle is hauled away
- Safer than internet forum sales, like Craigslist, where scams are rampant
You will be paid an amount that takes into account the type and condition of your vehicle, as well as the demand for parts.