Jul 24, 2009 11:20 am US/Eastern
Expert On Capitalizing On 'Cash for Clunkers'
NEW YORK (CBS) ―
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A clunker was defined as any car more than nine years old.
CBS
If you've been looking to get rid of an old vehicle, a law is now in place that could save you money.
The government "Cash For Clunkers" deal starts Friday, in the hope of boosting auto sales and getting the gas-guzzling vehicles off the road.
But what don't you know yet about the program and its guidelines?
CBS MoneyWatch Editor at Large Jill Schlesinger discussed what's in the program's fine print and what you can do to get the best deal using your clunker.
Schlesinger explained the clunker car has to get less than 18 miles per gallon. If you want to trade in one of your clunkers and get a new car, the government will give you $3,500 to improve the efficiency by four miles per gallon and $4,500 if you improve it by 10 miles per gallon or more. However, the government isn't going to give you cash, Schlesinger said, they're giving you a credit toward a new car for those dollar amounts.
Schlesinger added the car must be road-ready.
"This can't be something that's falling apart that looks like it fell off the lot," she said.
Also, Schlesinger said, insurance has to be in your name for a year, and the car has to be less than 25 years old. And, when you buy a new car, it can't just be new to you; the car has to be right off the assembly line.
If you want to lease, Schlesinger said, the lease must be for five years, which she observed is a "pretty long lease for folks."
Here's the other thingI it has to be less than $45,000. No fancy cars in a cash for clunkers deal.
However, the deal might not be worth it -- or even feasible -- for some people, Schlesinger said. A $4,500 rebate may not be enough to help some people afford the payments for a new car.
"That's probably one of the real downfalls of this," she said. "If you're really driving an old car, you have to factor in what's right for your family. Can you really afford it? There are three other things that are really important in this process."
The clunker should be worth less than the rebate, Schlesinger said.
Also, she recommended keeping your clunker plans quiet when you're at the dealership.
"You don't tell them about your clunker," she said. "You get a really good price first. This is a buyer's market for automobiles."
And finally, Schlesinger suggested "stacking" the rebates. She said dealers are putting incentives in high gear. Chrysler, for example, just announced they're going to match the rebate.
"You may not think, 'Oh, I want a Chrysler,' but if you end up with $9,000 off the price of a car, it could be worthwhile."
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