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Government CARS  Program- Cash for Clunkers - What Your Dealer and the Government Won't Tell You


July 27-2009

I recently traced in an old 1995 F-150 truck for a new Honda Civic Ex 4-door.  Eligible for $4,500.  Straightforward right?  No


Official CARS Program Information

Be sure to read up on the CARS program at the official web site:  http://www.cars.gov/

Click on the tab labeled "Official Information".  You will see a list of three items that you can click on for more information:

        Download the Rule

        Down the Day One Notice

        Download the Law

I strongly recommend you wade through this, especially the "Download the Law" portion.



Trade In

Don't confuse the trade in value with the CARS program amount of $3.500 or $4.500.  They are different.

The $3,500/4,500 is a cash amount paid to dealers for eligible cars.  It is not the value of your trade in.

The value of your trade in is its salvage value.

The CARS program requires the Dealer to give you an estimate of the salvage value. 

        http://www.cars.gov/files/CARS-Law.pdf  Sect 1302 - (d) - 4

Mine did not give me anything and ultimately the net salvage value was pocketed by the Dealer.


The government allows the dealer to retain $50 of the salvage value for participating in the CARS program.

          http://www.cars.gov/files/CARS-Law.pdf  Sect 1302 - (d) - 4

The net is the value of your trade in.  You should negotiate it as part of your deal.


Sales Agreement / Bill of Sale

You should get a copy of the Sales Agreement/Bill of Sale that you signed in the Dealer Finance person's office.

Ours did not give us a copy.  We overlooked that fact til we got home.  When I called back, the finance person refused to give us a copy.  He was not going to do so until the Goverment paperwork was fully processed and they received the money from the Government.

After escalating to higher management, we were given a faxed copy of the document.

You should always be given a copy of EVERY document you sign.  Don't leave without it.


Contingent Sale

Although they never raised the issue, my dealer treated this like a contingent sale, a sale that really happens only when the government comes up with the money we are elgible for.  But from the talk it sure seemed that way.



My salesman called, in a panic, about three forms he needed signed. He even offered to come to our house.  clearly this was urgent to him and the dealership as we are 35 miles away.

Contingent Sale Document

This was presented as something required by the State of Texas.  I think not.  It stated that if the dealer did not receive the $4,500 from the government, that we were responsible to pay that amount.  We declined to sign this.

Estimate of Salvage Value and Agreement for the Dealer to Retain $50

This document we signed.  It stated the estimated salvage amount.  This was not originally provided to us but according to the CARS.gov web site, the dealer is required to do so.  It included an acknowledgement that the dealer retains $50 of this amount for costs of administering the CARS program.  This is in accordance with the law.

The document also had us agree that the dealer could retain the other $200 and it stated it was for the CARS program.  The CARS.gov law stated that dealers many not charge any fee, other than the $50, related to the CARS program.

Revised Sales Agreement

The last rewritten document was the overall sales agreement.  The original document stated N/A in Trade in value and $4,500 on a line near the bottom labeled "Less rebate/factory incentive" after which was handwritten "CARS program".  The revised form moved the $4,500 to the Trade in value line.  The advantage to the dealer is that a buyer who reads the agreement line for line will not question why there is no trade in value and likely not discuss the salvage value of the car.  We did sign this agreement.