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Consumer Advisory Bulletin- September 2009

“Cash for Clunkers” Consumer Tips



The “Cash for Clunkers” federal program offers new-vehicle buyers a fresh opportunity to trade in older vehicles for new, more-fuel-efficient cars and trucks. Consumers can get a credit of $3,500 or $4,500, depending on the difference in fuel economy between the new vehicle and the trade-in. Details are at www.cars.gov. The toll-free Cash for Clunkers Hotline is 866-CAR-7891 (or 866-227-7891).

Consumers should consider several issues before using “Cash for Clunkers”:

  • Go to www.cars.gov, the federal government’s web site with details of the program. It’s very helpful. Do your research before going to the dealer. (Don’t rely only on an auto dealer’s or manufacturer’s description of the program.)

  • Try to be sure your trade-in qualifies before you go to a dealership. The Attorney General’s Office has heard reports that some dealers are insisting that buyers return new vehicles and “unwind” the deal if it turns out a trade-in does not qualify. Dealers must determine whether your car qualifies before they agree to the deal. If a dealer contacts you and attempts to “unwind” the deal, consider filing a complaint with the AG’s Office before agreeing to the dealer’s request.

  • Don’t do business with a dealer who claims to be “specially chosen” to be a “local representative” of the program, or makes similar claims. The Cash for Clunkers program does not specially select dealers. Dealers must register with the program, but the government does not select which dealers may participate.

  • If your finances are tight, consider how much you will have to pay for the new vehicle, and whether you really can afford it. The Cash for Clunkers program may be enticing as a way to get more for your trade-in than it really is worth -- but don’t do it if buying a new vehicle will put you in a financial bind.

  • As always, when buying a new vehicle: Consider alternative makes and models that may fit your needs and desires. Check out recommendations at the Consumer Reports web site or annual automobile issue (usually a spring issue). Consider financing sources in addition to or as an alternative to financing arranged by the dealer. Remember, dealers generally make more profit from add-ons, such as financing, than they do from the vehicle sale itself.

If you have any complaints about a transaction involving the Cash for Clunkers program, file a complaint with the Attorney General’s Office. Contact the AG’s Consumer Protection Division at 515-281-5926, or 888-777-4590 (toll-free). The web site is www.IowaAttorneyGeneral.gov (click on “Protecting Consumers.”)