"Cash for Clunkers" Frequently Asked Questions
1. What is "Cash for Clunkers," or the Car Allowance Rebate System (CARS)?
CARS is a new federal government program that will help you pay for a new, more fuel efficient car or truck from a participating dealer when you trade in a less fuel efficient car or truck. For more information, go to www.CARS.gov.
2. What is the amount of the credit?
The amount of the credit is $3,500 or $4,500, and generally depends on the type of vehicle you purchase and the difference in fuel economy between the purchased vehicle and the trade-in vehicle. Different requirements apply to large trucks.
3. Do I have to pay state or local sales tax on the amount of the CARS program credit?
In Virginia, sales and use tax will be collected by DMV on the sale price of the new vehicle, which means the credit/rebate amount from the CARS program will not be subtracted before the tax is calculated.
4. What are the sales and use tax requirements in Virginia?
Virginia charges a three percent Motor Vehicle Sales and Use Tax based on the vehicle's gross sales price or $35, whichever is greater. This tax is collected at the time you title your vehicle, whenever a vehicle is sold and/or ownership of the vehicle changes.
5. What will I need to bring to the dealer to participate in the CARS program?
- One-year proof of insurance on the trade-in vehicle. If your insurance card does not cover the entire year preceding the trade-in, you will need to provide other documentation. Contact your insurance company for more information.
- Title for the vehicle, in the purchaser's name, that is clear of liens
- Proof of registration for the trade-in vehicle, going back at least one year, which can be a registration card or vehicle record; if the registration/record does not go back one year, it can be combined with a title that is at least one year old. All documents must show the purchaser of the new vehicle as the owner of the trade-in vehicle.
- The vehicle manufacture date, usually found on the driver's door jamb, must be less than 25 years old at trade-in
6. How can I verify the ownership record of my vehicle to the dealer?
You can bring a vehicle registration card or a record of the vehicle. It costs $8 to obtain your vehicle's record from DMV. Go to dmvNOW.com and click on "online transactions." You can view your vehicle record online if you have a DMV PIN number; or, input your customer number and date of birth and your record will be mailed to you. To obtain a replacement registration card at dmvNOW.com, you will need your vehicle title number and the last four digits of the vehicle identification number. Customers may also request their vehicle record or a replacement registration card through DMV's automated telephone service at 1-888-337-4782 or by visiting a DMV customer service center.
7. What if I lost the title for the vehicle I want to trade in?
DMV issues replacement titles for vehicles if a title is lost, mutilated or illegible for $5. Go to dmvNOW.com, click on "online transactions" and input your customer number and DMV PIN. Customers may also obtain a replacement title through DMV's automated telephone service at 1-888-337-4782 or by visiting a DMV customer service center.
8. Can I get a replacement title if there are liens on my vehicle?
If your vehicle is free of liens, you will receive a replacement title. If your vehicle originally had a lien on it, you will need to show that the lien has been satisfied. If the lien has not been satisfied, the replacement title will be sent to the lien holder of record.
9. How do I get a lien removed from my vehicle?
When you pay off your vehicle loan, lenders who participate in Virginia's Electronic Lien program will electronically release the lien with DMV and you do not need to take any action. However, if your lender does not participate in Virginia's Electronic Lien program, the lender will mark on the title that the lien was satisfied and mail the title to you. This does not remove the lien from DMV's records. You should bring the title to any DMV customer service center and apply for a substitute title for $10.
10. Do I need to get a voucher or sign up to participate in the CARS program?
No. You do not need a voucher and you are not required to sign up or enroll in this program. Participating new car dealers will apply a credit, reducing the price you pay at the time of your purchase or lease, provided the vehicle you buy or lease and the vehicle you trade in meet the requirements. The dealer will then obtain reimbursement from the federal government.
11. How do I know if a dealer is participating in the program?
You may wish to contact dealers in your area to ask whether they plan to participate in the program.
12. In addition to the credit, will I get the full value of my trade-in vehicle?
No. The law requires your trade-in vehicle to be destroyed. Therefore, the value you negotiate with the dealer for your trade-in vehicle is not likely to exceed its scrap value. The law requires the dealer to disclose to you an estimate of the scrap value of your trade-in vehicle.
13. How do I know if my car or truck is an eligible trade-in vehicle?
Your trade-in vehicle must
- have been manufactured less than 25 years before the date you trade it in
- have a "new" combined city/highway fuel economy of 18 miles per gallon or less
- be in drivable condition
- be continuously insured and registered to the same owner for the full year preceding the trade-in
14. How do I find out when my vehicle was manufactured?
The month and year of manufacture appear on the safety standard certification label that is located on the frame or edge of the driver's door in most vehicles.
15. How do I find out the combined city/highway fuel economy rating of my trade-in vehicle?
Go to http://www.fueleconomy.gov/feg/sbs.htm and click on the model year of your vehicle, the make, and then the model. Under the words "ESTIMATED NEW EPA MPG" in the red banner, there is a red number with the word "COMBINED" under it.
16. Is there a cap on the price of the vehicle I can buy or lease under the program?
Yes. The manufacturer's suggested retail price cannot exceed $45,000.
17. Does the program apply if I want to buy a used car?
No. The program does not apply to the purchase of used vehicles.
18. Is this program only for American cars?
No. You may trade in or buy a domestic or a foreign vehicle.
19. May I receive or use more than one credit under the CARS program?
No, the CARS Act specifies that not more than one credit may be issued to a single person, not more than one credit may be issued for joint registered owners of a single eligible trade-in vehicle, and that only one credit under this program may be applied toward the purchase or lease of any single new vehicle.
20. What happens to the vehicle I trade in?
The CARS Act requires that the trade-in vehicle be crushed or shredded so that it will not be resold for use in the United States or elsewhere as an automobile.
For more information, go to www.CARS.gov