It's an effort to stimulate the economy and move cars off lots, plus help the environment.
The government rebate is taken off the price of the car after manufacturer discounts and incentives are applied, but there are certain requirements shoppers have to meet.
To begin with it, it only applies to vehicles with a manufacturer suggested retail price (MSRP) of $45,000 or less.
It may still be cheaper to buy a used car, but it is certainly a good program for people who want to buy a new one.
For Susan Hurt and her husband, without some of the Cash for Clunkers federal stimulus program, they would likely have not set foot in Joe Rizza Ford's showroom.
"He's been trying to get rid of his car. Nobody would trade it in for us before, so now because of this, we can," buyer Susan Hurt said.
Designed to get people like the Hurts back into the market, the program approved by Congress last month, and known as the Car Allowance Rebate System (CARS), offers up to $4,500 to owners giving up their fuel-greedy cars.
"It will help sales. It is a stimulus, but it's a very short-term package right now. Anything right now that helps bring in sales and helps the economy and is something we welcome," Dan McMillan, of Joe Rizza Ford, said.
The requirements of the program are:
- Your trade-in vehicle must be less than 25 years old
- It must get 18 miles per gallon or less.
- You must prove your vehicle has been continuously insured and registered for at least one year before the trade-in.
- When you trade it in, it will be scrapped.
- Your trade-in value should be less than $4,500.
- It only works if you purchase or lease a brand-new vehicle.
Not everyone qualifies. For example, if you have a 2002 Escalade, it's probably worth more than $4,500 so this program won't work.
Also looking to capitalize on the program is Chrysler. They're offering buyers $4,500 cash on top of the government rebate on qualifying vehicles.
That could amount to a potential $9,000 in savings off a new car. The program runs until November 1 or until the allocations run out, and there is only $1 billion allocated. One billion divided between 19,000 dealerships nationwide is not much.
For more information, please visit www.cars.gov.