Think Smart When Using The Cash For Clunkers Program (CARS) Rebate

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The toughest things customers have found that want to participate in the Cash For Clunkers Program / Car Allowance Rebate(CARS) is finding out if their car qualifies, and making sure the Dealer is giving you the best deal. To help eager Car Buyers CBS Money Watch (http://www.moneywatch.com) has gone over some important facts to help you find out if you qualify, and how to make sure you don’t get taken advantage of at your Local New Car Dealer.

Here’s how to make the best use of the Cash For Clunkers Program / Car Allowance Rebate(CARS).

1. Go for the rebate only if it’s more than your clunker is worth. The rebate may be too stingy to be worth your while. Many older cars have trade-in values far higher than the $3,500 and $4,500 rebate amounts. Don’t assume yours doesn’t. Even some 1999 Ford Econoline minivans (14 mpg), for example, could be worth more than $4,500 in a private sale. Kelley Blue Book or Edmunds.com can help you determine your clunker’s value. The dealer is supposed to include your old car’s scrap value in the deal, but that’s not likely to amount to more than a few hundred dollars (minus the $50 paid to the dealer for administrative costs).

The best models to trade in for government rebates are “older cars that are not worth much and get poor gas mileage,” says Eric Evarts, associate autos editor at Consumer Reports. Examples from Consumer Reports’ list of the best gas guzzlers to junk: any pre-1998 Mercury Grand Marquis, older truck-based SUVs with V-6 or V-8 engines, four-wheel-drive Chevrolet Silverado trucks from 1997 or earlier, and pre-1998 Dodge Durangos.

2. Don’t tell the dealer about your clunker right away. It’s a buyer’s market these days, so you have a lot of leverage in the auto showroom, even without the government rebates. Tell the dealer that you’re interested only in discussing the new car purchase, and then work out the best price you can. Only then should you mention you have a clunker and that you want to have its rebate amount subtracted from the new-car price you’ve just negotiated. If you let the dealer know about your clunker immediately, he may jack up your new car’s purchase price, since he’ll know you’re getting the rebate.

3. Stack rebates on top of manufacturer discounts. You may be able to lower the new-car price even further by combining an automaker’s discounts with the government’s rebate. For a small, fuel-efficient car, the result could be a mouthwateringly low price. For instance, a 29 mpg Hyundai Accent with an MSRP of $12,670 would run just $6,670 after the $4,500 rebate and $1,500 in Hyundai discounts.

(information courtesy of CBS Money Watch – copyright 2009 CBS Interactive Inc.)