Cash for Clunkers brings praise and headaches

Estimated read time: 5-6 minutes

This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.

SALT LAKE CITY -- The government's Cash for Clunkers program has been a runaway success with car buyers and auto dealers, but it's also causing headaches, confusion and worry.

At Tony Divino Toyota in Riverdale, business has just about doubled in the last month thanks to Cash for Clunkers, which offers $3,500 or $4,500 to buyers who trade in fuel-inefficient vehicles that meet the Car Allowance Rebate System (CARS) requirements.

"Oh, absolutely, it's been very successful in that way," said general manager Russell Layton. "It's got people out looking and buying cars and drummed up a lot of enthusiasm."

Cathlene Ellsworth of West Point is buying a new Toyota. She said she couldn't afford it without the federal reimbursement because her old Thunderbird has a very low trade-in value.

**What is… CARS**![](http://media.bonnint.net/slc/1363/136305/13630584.jpg)

The CAR Allowance Rebate System (CARS) is a $3 billion government program that helps consumers buy or lease a more environmentally friendly vehicle from a participating dealer when they trade in a less fuel-efficient car or truck. The program is designed to energize the economy; boost auto sales and put safer, cleaner and more fuel-efficient vehicles on the nation's roadways. Consumers will receive a $3,500 or $4,500 discount from the car dealer when they trade in their old vehicle and purchase or lease a new one. -[*CARS.gov*](http://www.cars.gov/)

"About $500," Ellsworth said. "So the $3,500 we got with Cash for Clunkers was really a bonus that enabled us to get into a car." But the program is bogged down in paperwork. Dealers aren't getting the reimbursements because there aren't enough federal workers to process approvals--the government owes Tony Divino Toyota about $300,000.

"Out of the 85 that we've sent in, we have about five of them approved so far," Layton said.

Nationwide, a number of dealers are saying they won't sell any more cars in the system until they get the money they're owed. The Utah Automobile Dealers Association isn't yet aware of any dealers opting out of the program, but the association's executive director, Craig Bickmore, says some estimates that say only 2 percent of all requests have been paid may actually be an overestimate of a sluggish process.

"Very few dealers have been paid," he confirmed. "And so ‘sluggish' is probably pretty optimistic."

Congress has approved a total of $3 billion to fund Cash for Clunkers. But until the government pays the money back to the dealers, Bickmore says they are basically floating the cash in order to help the buyer make the sale.

"That hurts to fund those kind of things, especially when cash flows are pretty tight," Bickmore said.

There's also confusion about which clunkers qualify under the CARS system. We know of one family that bought a new car--not from Tony Divino Toyota, but from a different dealer--only to have the rug pulled out a week later when they found out their clunker didn't qualify.

"There is some confusion there," Russell Layton said. "In fact, the government's actually gone on and changed some of the vehicles that originally qualified and that now currently don't."

Some say the program is also hurting charities that rely on people giving away their old clunkers. Auto mechanic Ron Cobbley, who owns Tech 100 Auto repair in Layton, likes to fix-up old cars that he buys cheap or gets through donations, then he gives them away to needy people.

**Trade-in requirements**

Your trade-in must: • be less than 25 years old, but no less than a 2001 model • have combined city/hwy fuel economy of 18 mpg or less • be in drivable condition • be insured/registered to same owner for full year preceding trade-in -[*CARS.gov*](http://www.cars.gov/)

Like the Kidney Foundation and the American Lung Association, Cobbley is worried that people are cashing in old cars they might otherwise have donated. "Indeed, most of them are clunkers and should be scrapped, but there's a small percentage--probably 10 to 15 percent of them--that could go to somebody that needs a vehicle," Cobbley said.

Despite all that, Bickmore says he feels like Cash for Clunkers has been a good program and a boon to the economy.

Meanwhile, dealerships are hoping hundreds of new contract workers hired by the National Highway Transportation Safety Administration, or NHTSA, will help the government catch up on the paperwork backlog and get cash flowing to the dealers.

"We are anticipating that they will get paid quicker, sooner, starting this week, because of the extra personnel that NHTSA has put on," Bickmore says.

NHTSA runs the CARS program and is supposed to pay dealers within 10 days after a completed application is turned in. So far, that time line isn't being met.

In addition to delays because of the sheer popularity of the program, when applications are sent incomplete, they are rejected and put at the back of the line, adding to the backlog. The government is working with dealers to make sure they are fully trained on how to fill out the needed paperwork.

If you have a car to donate or believe you deserve a giveaway, e-mail Ron Cobbley.

------

Story compiled with contributions from John Hollenhorst and Becky Bruce.