AAA Has Tips for Consumers During Last Days of 'Cash for Clunkers'

(PORTLAND, Ore.) - The U.S. federal government’s Consumer Assistance to Recycle and Save (CARS) program, commonly referred to as “Cash for Clunkers,” will come to an end next Monday, August 24 at 5 p.m. Pacific Time, which means this will be a busy weekend at car dealerships.

AAA has tips for consumers who will be out car shopping during the last days of the CARS program. While "Cash for Clunkers" can provide a great incentive to purchase a new vehicle, AAA urges potential car buyers to fully educate themselves about the program, their options and their potential new vehicle.

“As with any vehicle purchase, you need to do your research and educate yourself on all the options before making a decision,” says Earl Baker, the Approved Auto Repair Coordinator for AAA Oregon/Idaho.

“For most Americans, their vehicle is the second largest investment they make. It’s not something to be rushed into or taken lightly. But for those who take time to learn about all their options, including their eligibility for the CARS program, they can find the right vehicle to benefit them now and for years to come.”

AAA Oregon can also help consumers with the purchase of a vehicle with the AutoSource program. Our professional consultants are not tied to one make or model and will find the vehicle you want, including vehicles that qualify for the CARS program. AAA members can call 877-503-422 for more information.

1. Check the value of the trade-in vehicle in advance. If it's worth more than the $3500 or $4500 credit offered through the CARS program, you should sell your existing vehicle separately. Visit AAA.com/auto for assistance in determining the value of your existing vehicle.

2. Negotiate the best deal. Regardless of the incentives offered under this, or any other program, consumers should always negotiate the best possible deal on the three most important aspects of most vehicle purchase transactions:

In addition to the credit via the CARS program, consumers also may qualify for other dealer incentives, manufacturer rebates or federal incentives (such as those for hybrid vehicles). Not all deals will be the same, so you should shop around.

3. Evaluate the total cost of vehicle ownership. Determine if a new vehicle is affordable and what type of new vehicle to purchase based on the total cost of vehicle ownership, not just the purchase price. Other costs that should be considered include finance charges, auto insurance rates, fuel economy, taxes and registration fees, depreciation value and maintenance costs.

"Higher insurance costs for a new car may eat up a chunk of the savings you can get with the Cash for Clunkers program, says Bob Sadler, Director of Insurance Agency Services for AAA Oregon.

"It's always a good idea to call your insurance agent before you buy a car to avoid an unplanned expense that you'll have to live with for years to come."

Consumers should check with their insurance agent and reference AAA’s Your Driving Costs brochure for assistance in determining the true cost to own and operate a new vehicle and even evaluate if the costs fits into their budget. The latest edition of Your Driving Costs is available on the AAA Exchange at AAA.com/publicaffairs.

4. Consider used vehicles. While a used vehicle does not qualify for the Cash for Clunkers program, it may be a better alternative depending on your financial situation. While new vehicles can initially have lower repair costs due to manufacturer warranties, they also have far greater depreciation value initially.

5. Select the right vehicle for you. Only select new vehicle models are eligible for the CARS program. While a wide variety of vehicle types are included, don't feel pressured into purchasing a vehicle that doesn’t fit your needs and lifestyle. AAA recommends consumers consider fuel-efficiency a high priority.

Some of the factors to consider include: How large is your family now and how may it change in the near future? How long is your commute? Will you need to tow a boat or use it for other recreational purposes? Do you travel with pets? Do you want a more environmentally-friendly vehicle?

6. Do not sign contingency agreements. Consumers should not sign contingency agreements to pay back the dealer should their CARS credit be rejected. It is the dealer’s responsibility to make sure the purchase qualifies for the program.

7. Take possession of new vehicle at time of transaction. If the dealer has the new vehicle in stock, you must be allowed to take possession of the vehicle at the time the paperwork is complete. Consumers do not have to wait to take possession of their new vehicle until the dealers receive their CARS credit from the federal government.

8. Don’t pay an extra fee. Consumers should not be charged a fee by dealers specifically to process paperwork for the CARS program. While other dealers fees will still apply, there should be no additional fees for this program.

The CARS program provides auto buyers with a $3500 or $4500 credit if they trade in an inefficient used car or truck, built in 1984 or later, for a more fuel-efficient, new vehicle. The credit is in addition to any incentive that a dealership also may provide the buyer.

To qualify, the trade-in must be a drivable car or truck with a fuel-economy rating of 18 miles per gallon or less that has been insured and owned by the seller for one year or more. Consumers can check the eligibility of their trade-in at fueleconomy.gov/feg/CarsSearchIntro.shtml.

Eligibility of the new vehicle is determined by the increase in the miles per gallon (mpg) of the new car or truck compared to the trade-in. New cars and minivans must get a combined 22 mpg or more to be eligible. Light duty trucks (such as pickup trucks) and sport utility vehicles weighing less than 6000 pounds must get a combined 18 mpg or more. Consumers can check eligibility of trade-ins compared to new vehicles at fueleconomy.gov/feg/CarsSearchIntro.shtml. How is the amount of the credit determined?

The amount of the credit will be determined by the difference in fuel mileage between the trade-in vehicle and the new vehicle purchased. If the new vehicle has a combined fuel economy of at least four mpg, but less than 10 mpg, higher than the trade-in vehicle, the credit is $3500. If the new vehicle’s combined fuel economy is at least 10 mph higher, the credit is $4,500.

The following documentation will be needed in order to participate in the CARS program and should be taken with you to the dealership:

Proof of continuous insurance for the past 12 months on the trade-in vehicle (may be consecutive insurance cards or a letter on insurance company letterhead)

Also, do not forget to take the actual trade-in vehicle with you to the dealership.