Cash for Clunkers:
In an effort to spur new-car sales, President Obama has signed into law a program that will allow owners of cars and light trucks rated at 18 mpg or less (EPA combined) to scrap those vehicles in exchange for $3,500 or $4,500 credits toward the purchase of more fuel-efficient new vehicles. The program isn't scheduled to be finalized until July 23rd, but it appears most of the eligibility requirements have been worked out. The following rules are incorporated into our clunker calculator at www.kbb.com/cashforclunkers.
Here are the rules for the "trade-in" vehicle:
- Must be in drivable condition
- Must have been continuously insured and registered in the same owner's name for the one-year period immediately prior to the trade in
- Must have been manufactured not earlier than 25 years before the date of trade in (some 1984 and 1985 model year vehicles won't qualify; see the manufacturing date on the driver's side door or door frame)
- Must have a combined fuel economy value of 18 miles per gallon or less (work trucks don't have a maximum fuel economy requirement, but must be model year 2001 or older)
While there's no value limitation included in the requirements, the max credit is $4,500 and the car has to be scrapped. So now matter how tough a time you're having trying to unload the $400,000, 14-mpg Rolls-Royce Phantom you picked up last year right before Bernie Madoff stopped returning your calls, this isn't the shortcut for you.
Here are the rules for the new vehicle:
- If you want to buy a car, you can scrap most any car, truck, SUV or van. If the fuel economy improvement is 4 mpg or greater, the credit is $3,500. If the fuel economy improvement is at least 10 mpg, the credit is $4,500. (The new car has to have a minimum combined fuel economy of 22 mpg.)
- If you want to buy an SUV, minivan or non-full-size pickup truck, you can scrap most any car, truck, SUV or van. If the fuel economy improvement is 2 mpg or greater, the credit is $3,500. If the fuel economy improvement is at least 5 mpg, the credit is $4,500. (The new car has to have a minimum combined fuel economy of 22 mpg.)
- If you want to buy a full-size pickup or large van, you have to scrap one or the other. If the fuel economy improvement is 1 mpg or greater, the credit is $3,500. If the fuel economy improvement is at least 2 mpg, the credit is $4,500. Alternately, you can trade a qualifying "work truck" for a $3,500 credit. (The minimum combined fuel economy for the new car is 15 mpg.)
- If you want to buy a work truck, you must trade-in a qualifying work truck for a $3,500 credit.
Is your Car a Clunker?
One of the first things we did when program details started to surface was tap into the Kelley Blue Book supercomputer for a list of cars and trucks that might be eligible under the current proposal.
KBB Provisional Clunkers List
Here are a few highlights from the list:
1994 BMW 750iL:Once, a premier V12-powered luxo-cruiser. Now? Clunkerific.
1994 Ford Bronco: O.J.'s "getaway" car. Toss in a Heisman Trophy and it might be worth a couple extra bucks.
1995 Jaguar XJ12 and XJR: These models still had the Jaguar "Leaper" hood ornament. Or should that be "Clunker?"
1999 Acura SLX and 2002 Honda Passport: A pair of gas-guzzling clunkers from Honda? These short-lived models were actually re-badged Isuzu vehicles.
1999 Land Rover Range Rover: A royal family favorite and the official vehicle of the Duke of Clunkersford.
1993 Mercedes-Benz 600SEL: A former staple of world leaders is now the choice of discerning clunkeristas.
2002 Jeep Grand Cherokee: Grand Clunker, perhaps?
2002 Nissan Xterra: You can cash-in your '02 Xterra, but what would you do with the kayak and mountain bike and parachute you bought to go with it?
2004 Land Rover Discovery: The starting sticker price on a 2004 Land Rover Discovery was about $35,000. Some of them are now worth less than $4,500. Clunk.
To be Fair...
Sub-par fuel economy and low current market value do not necessarily spell "clunker," and we'd be happy to drive good examples of any of the vehicles we identified above. But if we happened to own a shoddy example of a vehicle on the list and had our eye on a new car, we'd let the government call it whatever they wanted in exchange for a $4,500 credit toward a new car.
The Biggest Winners
Our preliminary list goes back to the 1990 model year, but the program as proposed would include vehicles manufactured within the past 25 years. Of the cars on our list, the 1990 Isuzu Amigo promises to deliver the biggest win to its owners. With a Kelley Blue Book Trade-in Value of $425 -- and that's in Good condition -- '90 Amigo owners might realize a market-based gain of more than $4,000 if they buy a new car that gets 10 more mpg.
A New Car for $6,000
The most affordable way to take advantage of the program? The 2009 Hyundai Accent, the lowest-priced car in America (MSRP: $10,665) and one rated at 29 miles per gallon. Trade in any qualifying car and you can have an Accent for barely more than $6,000 out of pocket (plus tax, title and license, of course). You'd also save around $750 per year on gas. And the 2009 Nissan Versais available for a mere $45 more.
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