Cash for Clunkers Starts Today!

Today the government rolls out the Car Allowance Rebate System (CARS), fondly known as "cash for clunkers". The nickname is actually a misnomer, because when you participate, Uncle Sam does not mail you a check for a new car. Rather, if you trade a gas guzzler with 18 mpg or less (combined city/highway) for a car whose fuel economy is at least 4 mpg higher, you'll get a government rebate (either $3,500 or $4,500) to use toward the purchase. (The rules for trucks are slightly different.)

This morning on The CBS Early Show, Maggie Rodriguez and I discussed 5 catches of the CARS program and 3 smart strategies to employ if you're thinking about participating.

In the end, the program is not by itself a good reason to cash in your older car. You must first make sure that you can afford to purchase a new car and/or absorb the new payments associated with it. Also, for many, it will be more advantageous to sell your clunker outside of the rebate program and use the cash to buy a new car.