Aside from all the celebrities deaths this week (R.I.P.), the biggest news relevant to personal finance this week was the Cash for Clunkers Bill. The Bill entitles you to a $3,500 or $4,500 credit for trading a drivable car made within the last 25 years, with a combined city/highway fuel economy rating of 18 mpg or less to a new higher fuel efficiency car. If the mileage improvement is 4 mpg or better, you’ll get $3,500. If your improvement is 10 mpg or better, you’ll get $4,500.

Photo by mzacha from stock.xchng

How the credit works?

You don’t have to do much to get the credit. Participating car dealers will apply a credit and reduce the price you pay at the time of your purchase or lease, assuming the vehicle you buy or lease and the vehicle you trade in meet the program requirements. The dealer will then obtain reimbursement from the government.

How will this help our economy?

There are two primary benefits of this bill. First, it helps stimulate the auto industry by helping them sell 1 million new cars. Second, it helps the environment by removing inefficient cars with more fuel efficient ones.

What the oppositions are saying?

Some people do not support this bill citing the following reasons:

1. It prematurely remove cars that are still functional from the road, and the pollution created during the process of manufacturing 1 million new cars may outweigh the benefit of removing 1 million inefficient cars.
2. Cash for clunkers will hurt car donations to charity because the amount of the voucher is so much greater than the tax deduction.

What to do next?

If you want to take advantage of the program, you have to act fast because there are only 1 million vouchers available. To learn more about the program, check out the official Car Allowance Rebate System site at CARS.gov (you got to love the acronym)! To check if your car meets the fuel mileage requirement, visit the FuelEconomy.gov site.

Learn More

If you’d like to learn more, here are a collection of articles about the Cash for Clunker program.

• 10 Things You Should Know About Cash for Clunkers at US News Fresh Greens by Maura Judkis (recommended)
• President Obama signs cash for clunkers bill from ConsumerReports.org
• Does your car qualify for Cash for Clunkers program? at WalletPop
• Cash for Clunkers Bill at Cash Money Life
• Cash for your clunker stimulus bill at Christian Personal Finance
• Cash for Clunkers Program at Frugal Dad
• Cash For Clunkers Rebate Program Might Save You Money On Your Next New Car Purchase. But Is It A Good Idea? at Bible Money Matters
• “Cash for clunkers” bill passed by Congress – what does it mean for consumers? at Wise Bread
• Cash for Clunkers: Is It Worth It? at MyLifeROI
• Cash for Clunkers Explained at Suburban Dollar
• Cash for Clunkers, A Clunker of a Law at Richer By The Day

Have a great weekend!

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