As you’ve undoubtedly heard, congress is very close to passing a so-called “cash for clunkers” bill (technically known as “Consumer Assistance to Recycle and Save Act“).

The idea behind this bill is to get older, less fuel-efficient vehicles off the road and replace them with newer cars and/or trucks. The hope is that this bill will 1) Help kick-start auto industry sales and 2) improve the environment by crushing a bunch of older vehicles that are currently polluting.

Little orange truck
Creative Commons License photo credit: k4dordy

While there are a lot of very smart people who dislike this bill – either because it’s not environmentally sound or because it’s not going to work – the fact is that none of this seems to matter. The bill was passed by a healthy majority in the House of Representatives, and most analysts seem to think it will pass in the Senate and be signed into law shortly. So, with that in mind, here’s what you need to know if you’re considering buying a new Toyota Tundra using a Cash For Clunkers voucher:

  • It’s only for new vehicles. Sorry, but no used vehicles will get vouchers.
  • Most vouchers will be $4500. The rules are a little complicated and still subject to change, but the long and short of it is this: Most new vehicles will qualify for a $4500 voucher. We ran a few different scenarios over the weekend and just about every one of them worked out to a $4500 clunker voucher.
  • It’s not just for domestic vehicles. When the bill was first being discussed, a lot of people wanted the money to be for domestic vehicles only (a.k.a. Ford, GM, and Chrysler vehicles only), but that provision was dropped early on.
  • Most “clunkers” are going to be old trucks or SUVs. The bill defines “clunkers” as vehicles averaging less than 18mpg (according to their combined rating on FuelEconomy.gov). That all but rules out most passenger vehicles.
  • The voucher can only be used if the trade is junked. The voucher cash is only available if the powertrain in the vehicle being traded-in is destroyed (and therefore made worthless). If your old truck is worth $2500, the local dealership is going to give you $2500 OR the voucher – not both.
  • It’s going to be hard (or very risky) to manipulate this program. It looks like the government is going to require dealers to verify the following for every “clunker”:
    • The clunker is drivable.
    • The clunker has been registered and insured by the trading customer for at least 1 year.
    • The clunker gets less than 18mpg.

    Enforcement is probably going to be some version of the honor system with random verification. Most new vehicle dealers will be very careful to follow the rules because the penalties will include prison. SO, if you don’t currently own a clunker, there’s probably not much point in rushing out and buying one in order to get the voucher.

  • This bill is going to make your old truck more valuable. If you have an old truck or SUV that qualifies for the clunker program and you’re NOT interested in buying a new vehicle, there’s a silver lining for you. As old trucks and SUVs are junked, the few that remain will definitely increase in value.

If you’ve got an old clunker, you’ve got one more reason to buy a new Toyota Tundra!

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