In an effort to help cut down on gas guzzling cars while at the same time stimulating the economy, the US government passed a bill known as the Car Allowance Rebate System (CARS). This has – more colloquially – become known as the “cash for clunkers” program because it gives people up to a $4,500 exchange credit on a new car when they bring in their old gas guzzlers. However, you should know that you will still have to pay taxes on the rebate, so don’t think that it’s completely free and clear money. Since this is such a whirlwind program, there are quite a few people who are interested in utilizing this government money, but don’t understand how it works.

One of the first things most people may not realize is that there are some eligibility requirements that your vehicle must meet before it’s eligible for the cash for clunkers exchange. This was done to help ensure that only cars that are high in gas consumption would be able to get the government money. If you’re interested in finding out if your vehicle will qualify for this rebate, check out the following guidelines.

First of all, the car has to be less than twenty five years old at the time that you trade it in, and you have to be using the credit on a new vehicle. The vehicle that you’re trading in must get less than eighteen miles per gallon, which is determined based on standards that are set up and accepted by the government. However, if you drive a large pick-up truck or cargo van, you’ll want to check with the dealer to make sure that it meets the requirements, as the MPG rating on these vehicles is slightly different since they’re naturally less fuel efficient.

In addition, if you’re going to trade in a vehicle through the cash for clunkers program, you’ll have to make sure that it has been registered and insured by you on a continuous basis for at least one year prior to the trade in date. Plus, you’ll need to make sure that the car is in drivable condition, as this is also one of the requirements. The program is set to run from the first of July 2009 until the first of November 2009 or until funds are depleted. In fact, the program has already reached its funding limit once, although Congress was quick to approve more funding.

So, if you think that your vehicle may qualify for the cash for clunkers rebate and you can afford the payment on a new car, go to your local dealer as soon as possible to make sure that you’re a part of this amazing government incentive. Or, if you have further questions concerning your eligibility or the program in general, you can visit the government’s official website at www.cars.gov. This way, you can directly verify what the government considers the official MPG rating of your vehicle so that you can go into the dealer prepared. But, if this is something that you are considering you will need to move fast – there’s no guarantee how long the funds will last.