Cash for Clunkers Starts Today!

Last Updated Jul 24, 2009 10:10 AM EDT

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.

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    Jill Schlesinger, CFP®, is the Emmy-nominated, Business Analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and Chief Investment Officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.