Cash For Clunkers - AKA
Car Allowance Rebate System
Consequences of the Cash For Clunkers Program
In 2009, Laurens Auto Salvage participated
in the "Cash For Clunkers" program. We found there was so much chaos and
confusion during the implementation of this program that we decided to
create this FAQ page to help our dealers with program implementation. In
addition, it answered many questions from our customers who were
attempting to salvage vehicles and (mistakenly) obtain a government
credit for them. Although difficult, in general the program was a
success for our business at the time. Unfortunately, years later we,
along with others in the industry, are now suffering the consequences
this program has had on the recycling industry.
It has created such a shortage of quality
used cars that car dealers are now competing with auto recyclers to
purchase wrecked, or "total loss" vehicles at insurance auctions. These
dealers then repair these vehicles and attempt to sell them to consumers
as quality used cars, when in reality they are literally nothing more
than rebuilt wrecks with "salvage" titles.
From a consumer standpoint, car buyers are
unknowingly paying full retail price for salvaged, or "total loss"
vehicles that are often worth only a small fraction of NADA retail
value, at best! In the worse case scenarios, many of these repaired
vehicles may not be safe, and families all over the country could be
driving vehicles with compromised crumple zones, damaged suspensions,
disabled safety features, non functioning air bags, and even
miss-aligned drive trains that contribute to poor safety, poor fuel
economy, and excessive mechanical wear.
From the auto recycling industry
standpoint, when car dealers bid up the price of total loss insurance
vehicles, this takes parts vehicles out of the market and creates a
shortage of good used parts available to automotive repair and body
shops. In addition, it drives up the cost of inventory that auto
recyclers are able to purchase, thereby forcing recyclers to raise the
price of salvaged parts and to further cut costs in order to stay in
Basically, this program has evolved into a
loose-loose situation for all parties involved. Consumers get
substandard merchandise, car dealers have to fix and sell wrecks because
there are no good used cars available to buy and resell, and auto
recyclers can't get the inventory they need and are forced to raise
prices and cut costs. Unfortunately, this was a hard lesson learned that
any time the government intervenes in the private market, such as is the
case with the cash for clunkers programs, it completely throws the
natural market factors out of whack and often causes far more problems
that anyone could have possibly envisioned. What started out as a
bailout for the automakers has now severely damaged the used car and
auto recycling industry in the United States.
We have kept our FAQ page on the internet
for historical and reference purposes. Please feel free to read the FAQ
below to see exactly how the program worked.
We have been receiving many questions regarding the new "Cash For
Clunkers", A.K.A. "Car Allowance Rebate System" ever since it was
implemented on July 1st 2009. Due to the volume of requests, we have decided to
include this small FAQ (frequently asked questions) section on our site.
After carefully reviewing the program and the disposal requirements, LAS
has decided to service our new car dealer customers by accepting and
recycling the vehicles traded in for this program. Please review the FAQ
section below for more details.
Is LAS on the
government list of approved recyclers to accept CARS trade-ins?
-- Yes. Because we
participate in the ELVS (End Of Life Vehicle
Solutions) mercury switch recycling program, we are certified by the
NHTSA (National Highway Transportation Safety
Administration) to accept and recycle these trade-in vehicles.
have the capability to recycle CARS trade-ins according to
government regulations? Yes, we recycle motor oil,
transmission fluid, differential oil, lead-acid batteries, mercury
switches, engine coolant, and AC refrigerants in accordance with EPA and SC DHEC regulations.
do you pay for vehicles scrapped under this program?
-- Most of our participating new car dealers prefer a "fixed
payment" for each car we purchase under this program. It keeps
paperwork simple and the dealer knows exactly how much "scrap value"
to allow each consumer above and beyond the $50.00 the dealer can
keep for program administration costs. Please contact Mr. Paul
Eschenbach for more pricing details.
responsible for "seizing" the engines on these trade-ins; the dealer
or the disposal facility? -- According to "The Rule"
released on July 25th, the dealer must seize the
engines and certify they have done so before turning them over to
the disposal facility (recycler). We recommend that dealers wait
until the trade-in has been approved for a CARS credit before
destroying the engine.... otherwise you might have to buy the car
from your customer if it is rejected for the credit.
provide us with the proper forms & documentation required for this
program? -- Yes, we provide a portfolio containing
all of our licenses & certifications, as well as all documentation
required for the program.
report their salvage vehicles, including CARS trade-ins to the
NMVTIS? -- Yes, we report all vehicles we purchase,
including CARS trade-ins, to the NMVTIS (National Motor
Vehicle Title Information System) via a data consolidator approved
by the DOJ (Department of Justice).
"crush" the CARS trade-ins as required by the program?
-- Yes. According to "The Rule", all vehicles disposed of under this
program must be "crushed" or "shredded" within 180 days upon receipt
from the dealer. Because we specialize in parts, we will dismantle
as many parts as we can from each vehicle before destroying them.
Never the less, what ever is left on the vehicle after 180 days,
along with the engine and the shell (containing the VIN), will be
destroyed at our facility.
What cars qualify for the
credit? -- Basically the car must be less than 25 years old,
must have been registered and insured for the last year, and get
a combined EPA fuel mileage of 18 MPG or less.
My car has
a salvage title, does it qualify for Cash for Clunkers?
- We at LAS have read all 136 pages of the law (hey, that's more
than most members of congress, and we just run a junk yard!) and no
where does it say anything about a salvage title disqualifying a car
for the rebate. It does say the title must not have any leans
against it, and that it must be owned by you and registered by you
for at least one year, salvage title or not.
knocks, smokes, leaks and the transmission slips. Does it still
qualify? -- Your car only needs to run well enough to
drive into the dealership where you wish to buy your new car. It
doesn't matter how bad it runs, leaks, smokes, or how loud it is.
Just as long as it meets all of the other requirements.
How do I get the money
from the Government?
-- You must buy or lease a new car, not a used one, a brand new one. Take
your car to a registered new car dealer and let them fill out the
paperwork for your credit. You don't receive any money, the
How much money can I get?-- Nothing! You don't get the "cash" for your "clunker", the
dealer does. However, the dealer will knock off $3,500.00 if your
new car gets 4 MPG better than your old one or will knock off
$4,500.00 if your new car gets 10 MPG better than your old one.
Do I get
to keep the money the salvage yard pays for the vehicle?
-- This is a "grey area" that was not made clear by the NHTSA,
however, the dealers in our recycling program are treating any money
received from us for the scrap price of the vehicle as a "scrap
rebate" off the price of the car. Just don't expect much! In
almost EVERY case the "scrap rebate" you receive (if any) will be
Why is the
scrap value so low? -- There are many reasons why
these vehicles are almost worthless, but the main reason is because
the dealer is required by law to destroy the engine in your car
after you trade it in, thereby taking away the number one item
recyclers sell to recover the price of the vehicle and the overhead
to process it. Other reasons include the enormous amount of
paperwork and reporting the government is requiring auto recyclers
to perform, the extra staff required to handle the extra dismantling
load, the short time line we have to dismantle the vehicles (just
180 days), and the infrastructure we must build to house the
Do I still get "incentives" at
dealers if I get the CARS credit? -- That's up to each car
company and individual car dealership, however, the answer is "yes";
you get to keep all advertised incentives and rebates offered by the
Can I turn my car into a "junk
yard" and get my credit? -- No.
Can I buy a used car and get my
credit? -- No. As stated, it must be a new car and purchased
at a registered dealership.
lease a new car and still get the credit? -- Yes. See
your local car dealer for more info!
Does my car have to run to
qualify for the credit? - Yes, it must be drivable.
I WANT to buy a new car and
trade in my old car for credit! How can I find out more? --
Go to the official government website at http://www.cars.gov/
to find out if your car qualifies.
afford a new car and want to junk mine. Where do I go?
-- Click here to find
out how to get cash for your junk car.
Attention New Car Dealers!!!
The one billion dollars allocated to
the CARS rebate system is going fast! Let Laurens Auto Salvage recycle
these rides so you can submit your trade-ins for credit now!