With car-buying interest high as a result of Cash for Clunkers, AAA wants to make sure potential car buyers are aware of the key points of this stimulus bill program in order to make a good decision about buying a new car or truck.
“As in many discount programs, consumer knowledge is key to getting the best possible deal,” said David E. Parsons, CEO and president of AAA Carolinas. “There are some reported practices buyers should be wary of and some financial analysis that needs to be done to ensure the buying decision is a good one.”
AAA Carolinas auto sales, insurance, and car care divisions provide their insight to almost 10 million motorists across the North and South Carolina, and answer some of the frequently asked questions (FAQs) about Cash for Clunkers:
What are the “basics” for Cash for Clunkers? Cash for Clunkers provides car buyers with a $3,500 or $4,500 rebate if they trade in a less efficient used car or truck, for a more fuel-efficient, new vehicle. This rebate is in addition to any incentive that a dealership my also provide the car buyer.
What is a Cash-for-Clunker “clunker?” Any car or truck built in 1984 or later, with a fuel-economy rating of 18 miles per gallon or less. There is a list that the dealership must check to verify that your clunker qualifies.
How do I know if my Cash-for-Clunker trade-in is worth it? Find out if the car you want will qualify for the $3,500 or $4,500 incentive. This is determined by the increase in the miles per gallon of the new car or truck that you want to purchase compared to your trade-in. Be sure the trade-in value of your vehicle isn’t more than the eligible rebate.
Is it just as easy as buying a car? Cash for Clunkers does add another layer of paperwork to the process. Most dealerships have a now understanding of the process, now since the stimulus bill is in its second round of funding.
Is there anything I should watch out for with Cash for Clunkers? Dealers in some states have allegedly required buyers to sign a statement that the buyer would have to pay the $3,500 to $4,500 rebate if the federal government did not pay the dealer. No buyer should sign such a statement. The dealer is responsible for making sure the purchase qualifies and the government pays.
Is it better to buy a used car than to participate in Cash for Clunkers? It depends. You can’t purchase a used car under the Cash-for-Clunkers program, but it may actually be a better deal for car buyers–even with the $3,500 or $4,500 incentive going toward the new car. Consider all options for buying your next car, as well as the changes in your auto insurance and maintenance.
How Will Cash for Clunkers affect a buyer’s car insurance? This is a little tricky. First, make sure your car insurance coverage on your car has been in place for at least one year in order to qualify for Cash for Clunkers. Beyond that, it’s like any other automotive purchase–you need to make sure you factor in the difference of your insurance coverage needed to cover your new car into your new monthly budget. Even if you’re only carrying state minimums for insurance, you could be looking at a few hundred dollars increase.
What should Cash-for-Clunkers car buyers think about from a car maintenance perspective? A new vehicle under warranty–or even a late model used car under warranty–is bound to cost less than your “clunker” when it comes to preventative maintenance and repairs. Whatever you buy, remember proper maintenance of your vehicle will extend its life and its resale value.
How long will Cash for Clunkers last? The stimulus bill only projected out to about 11-13 new cars per dealership with the original funding of $1 billion. The new bill extended by Congress runs through November 1st or whenever the additional $2 billion appropriation is spent. Many automotive experts feel the first round of Cash for Clunkers funding was used by many who were already looking to buy a new vehicle. Estimates vary widely on how many will take advantage of the extension.
An affiliate of the American Automobile Association, AAA Carolinas is a not-for-profit organization that serves more than 1.7 million members with travel, automobile and insurance services while being an advocate for the safety and security of all travelers.