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Cash for Clunkers in California

Cash for Clunkers was a federal program that ran under the Obama Administration in the United States. It was created to help switch more American drivers to more fuel-efficient cars. It provided an economic incentive to interest drivers in this program. The technical name for this program was the Car Allowance Rebate System, or CARS, but it is commonly referred to by members of the public as “Cash for Clunkers”.

Why Was Cash for Clunkers Created?

Obama’s Cash for Clunkers program was created simply to help the environment in terms of vehicles. Vehicles that run with poor gas mileage contribute harmful emissions into our society at a much quicker rate than those that are more fuel efficient. These harmful emissions harm the Ozone layer of the Earth. This first causes pollution and smog in our society, which can be harmful to breath in, especially to vulnerable members of society like babies and the elderly. It also causes global warming and climate change that is affecting our land, water, and the habitats of many animal species.

The Car Allowance Rebate System was an effort to help prevent these long lasting damages to our society. It’s secondary purpose was to help an economy that was suffering at the time. It helped consumers purchase new vehicles when its possible that they otherwise would not have been able to afford such a large purchase. It provided these consumers with a monetary compensation of either $3500 or $4500 to trade in their old, less fuel efficient cars for newer cars that were better for the environment.

The consumers were given $3500 for a vehicle that was 7 miles per gallon better than the vehicle that they traded in. For example, if the traded in vehicle had a fuel efficiency of 15 miles per gallon and their new vehicle got 22 miles per gallon, they would receive $3500. If the new vehicle had a better fuel efficiency of 13 miles per gallon or more, the financial award would have increased to $4500.

It also had the purpose of helping the economy through boosting vehicle sales. When consumers could not afford to buy cars, the vehicle sales industry of course suffered as well. The Obama Administration was hopeful that by contributing funds to the program, they would then help the vehicle sales industry at the same time.

Overall, the Car Allowance Rebate System was a large cost but it seemed like it would have multiple benefits to society, both environmentally and economically. Because of these possibilities, the Car Allowance Rebate System officially went into action on July 1st, 2009.

How Did Consumers Participate in This Program?

For consumers to participate in the Car Allowance Rebate System, they needed to have a vehicle that they currently owned and drove to trade in. This vehicle needed to have a fuel efficiency rating of 18 miles per gallon or below. This number as a baseline level of cars that are the most dangerous to our environment.

The vehicles that were to be traded in did need to follow some more specific guidelines than simply the fuel efficiency and miles per gallon measurement. They needed to be less than twenty-five years old on the date that the trade in took place. This kept consumers from trading in old cars that they likely were not using on a regular basis and receiving government money for a new car. This was a situation that the Obama Administration wanted to avoid because they wanted to get poor gas mileage vehicles off of the streets; they were not worried about removing old, more than likely failing vehicles from the garages and yards of the people who own them.

Also to ensure that the vehicles being traded in were actually the vehicles that were being driven and that were contributing to pollution, global warming, and climate change, consumers had to provide proof that the vehicle had been insured for at least one year prior to the trade in taking place. The vehicles had to be in drivable condition as well. This meant that the vehicles had to be running and they had to have all of the safety features necessary to be used on the road, such as windshields and windows, headlights and tail-lights, and working brakes.

On the end of the new vehicles being purchased, the requirements stated that the car needed to have a fuel efficiency rating of 22 miles per gallon or better. This was to ensure that the new vehicle would be significantly better for the society than the old vehicle. They also needed to be purchased on a five year or longer lease and have a suggested retail value of $45,000 or below.

What Happened to the Traded In Vehicles?

Typically, when vehicles are traded in to a dealership, the company can then sell the vehicle again at an affordable price. This is a large piece of the automotive sales industry, but if the vehicles were sold again there would be no benefit to the environment in the process of trading them in. Because of this, the Cash for Clunkers program required that these vehicles were destroyed.

The vehicles were sent to junk yards to be crushed and compacted so that their poor fuel efficiency was never adding to the depletion of our Ozone layer again. This process was different from the norm, since the vehicles being traded in were perfectly safe and in good condition to drive. This requirement was simply made to seal the end of vehicles that aimed to help the environment.

This part of the deal also took a piece of finances away from dealerships. Dealerships often count on the money that they bring in through the purchase and resale of used cars. So even though the program brought them added business, it took away a specific profit area as well.

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Was Cash for Clunkers Successful?

The answer to this question is fairly complicated. When Cash for Clunkers first began on July 1st, 2009, it was widely appreciated by consumers. It provided people without fuel efficient cars a monetary compensation for upgrading. In our society, free money and discounts are not things that are often turned down.

It can often be difficult to sell junk cars, especially for a good price. This is probably why so many people took advantage of this program so quickly. They had a vehicle that they may have already wanted to get rid of. Through the program, they could get money from their old vehicle without going through the daunting and difficult process of selling a used car.

In the one month and twenty-for days that the Car Allowance Rebate System was live, it collected around 685,000 vehicles. That number shows that in terms of acceptance from the public, the Car Allowance Rebate Program was extremely successful. The people of America took this opportunity and ran with it.

This helped both the economic improvement of families around the nation and added a large portion of business to vehicle sales companies over the time that Cash for Clunkers was active and available for consumers to use. Since the vehicles needed to be purchased on a lease at a dealership, sellers of new cars benefited greatly from this program during a time that was financially difficult for them.

Environmentally, the system seemed to be successful as well. It dramatically reduced the number of poor gas mileage vehicles that were driving on the road each day. The average miles per gallon of the traded in vehicles was 15.8. A majority of these vehicles were trucks, but every size and style of vehicle was represented in the group of trade in cars. The average fuel efficiency of the new vehicles purchased was 24.9 miles per gallon. That is an increase of 9.1 miles per gallon, or a significant percentage of 58 percent. This meant that the program caused 685,000 vehicles on the road to better their overall fuel efficiency by that 58 percent, leaving a large positive impact on the environment.

This percentage is large enough that we know it caused the pollution and smog rates to significantly decrease in a short amount of time. This provided an improvement in the fight against global warming and climate change that was extremely visible on paper.

This impact that happened during the Cash for Clunkers time frame can be seen through the statistics of purchased vehicles from July 1st through August 24th, in the year of 2009. Statistics for new vehicle sales are recorded by the quarter, or by every three month period out of the year. The projected number of vehicle sales for the entire year was predicted to be at 10.5 million by Financial Services. The total vehicle sales during Cash for Clunkers was clocked in at 11 million. By looking at these two numbers, it seems like the Car Allowance Rebate System was extremely successful. The rate of new car sales was exponentially higher than it was projected to be at.

However, if you dig deeper and take more statistics into account, it is unclear if the program really did have any impact at all. For example, during the quarter that came just before Cash for Clunkers car sales reached 9.6 million in total. This is still exponentially higher than the projected rate, even though the program was not yet in place.

When looking at all of the numbers at hand, it is hard to tell if the Car Allowance Rebate System was actually the cause for the higher rate of vehicles sales between July 1st and August 24th, 2009. Many financial experts believe that the majority of those cars would have been traded in and purchased whether or not there was a program with monetary compensation in place. They believe that it is likely that consumers wanted vehicles that were more fuel efficient, so they probably would have purchased the new cars anyway even if the Cash for Clunkers program did not exist.

Other financial experts state that even though the sales of vehicles did raise during Cash for Clunkers, all the program did was push these sales forward. They see the numbers and recognize that more people did purchase new cars during the time frame. They believe that these people would have needed new vehicles in the next few months anyways. They state that the program simply took these sales that would have taken place over the course of the next few months, and made them happen during the program time frame. They think consumers who were already planning on getting a vehicle in the new future pushed their timelines up to take advantage of the monetary compensation that was being provided by the federal government.

This makes it unclear if the Car Allowance Rebate System was an economically successful program. It is quite possible that it was a waste of government funding that did not make much of an impact on the finances of our society. Consumers could have purchased those new cars without help, and the vehicle sales industry could have been on the rise either way.

However, it does not take away every aspect of the environmental impact that the program created. Even though it is likely that our society would have been purchasing more fuel efficient cars without the program in hopes to reduce their carbon footprint and lower their gas expenses, this government program still made one significant difference.

As we mentioned earlier, vehicles that are used in a trade in deal during a new vehicle purchase are typically kept by the dealership, fixed up slightly, and resold as a used car at a reasonable and affordable price. This means that these cars, trucks, and SUVs with poor fuel efficiency are normally being resold and put back on the roads. It means that trade in vehicles are still adding to our pollution, global warming, and climate change.

It made an impact by ensuring that these vehicles with poor gas mileage were being taken off the road. More fuel efficient vehicles may have been added to our streets either way, but the government program ensured that they were not simply adding fuel efficient cars, they were using them to replace the vehicles that were harming our environment at the highest rate.

These cars that were taken off the streets were vehicles that people with a need for a vehicle but a small budget used to count on. Therefore, it could have slightly harmed the finances of people in the United States who rely on used cars for means of transportation. Luckily the program did not keep running so used vehicles are still available for these populations, but the program could have lowered their options during the time frame that it was active.

Overall, the success of this program is a very complicated topic. It has many pieces and perspectives to consider. Cash for Clunkers is typically seen as a program that was mostly unsuccessful. No one can prove that the program increased automotive sales. Consumers may have purchased the same number of fuel-efficient vehicles either way. It took away low priced vehicles for dealership business and for people who rely on these used cars for transportation, It did, however, make an impact on the environment by taking vehicles with poor fuel efficiency off the streets for good.

Are There Similar Programs Available Today?

Unfortunately, Cash for Clunkers is not a program that is available to participate in today. If you search for something like "Cash For Clunkers Near Me" you'll likely get results from local dealerships telling you how the program has ended. It was only available from July 1st, 2009 through August 24th, 2009. It was meant to be a program with a longer lifespan, but it ran out of funds in an extremely short amount of time.

The program was initially approved for one billion dollars. This limit was reached within weeks and it was then approved for an additional two billion dollars. The entire three billion dollars allocated to this use only lasted one month and twenty-four days.

If you are currently trying to sell an old car to upgrade to a new one, this news can be disappointing. It can be an extremely difficult task to sell an old car, especially for a fair price. You need to list your vehicle for sale, find interested people, and provide potential buyers with showings of the vehicle and test drives.

This process is time consuming and can be stressful. However, for most consumers it is financially necessary to sell an old car before they are able to start the process of purchasing a new one. Luckily, you do have another opportunity. You can sell your vehicle to SellMax. At SellMax, we buy cars in any condition. You don’t need to worry about the gas mileage. You don’t even need to ensure that your vehicle is in running condition. If you want to get rid of it, we will buy it. If you would like to get cash for your old vehicle the easy way, consider reaching out to SellMax today.