First, watch out for waivers. Some dealerships are asking customers who to sign a waiver stating that if the government doesn't come through with the money, the customer is responsible for it or must turn in the new car. "The good thing is, the Department of Transportation has said that buyers are under no obligation to sign these waivers," says Grant. If you're worried about being pressured to sign, call around first and find out which dealerships are asking for waivers and which aren't.
Also, it's important to know how much your car is worth before you trade it in. Sometimes, buying a used car might be a better option than taking the government-funded money. "If your clunker is worth near the $4,500 cap, then a used car might be a better value for you," says Grant.
While buying a car has always been a game of negotiation, the Cash for Clunkers program is hampering haggling a bit. "Edmunds.com has found that consumers are actually paying a little bit more since the Cash for Clunkers program started - they're not getting discounts that are as deep," says Grant. However, a government credit doesn't mean you can't negotiate. Just know that dealers may be less willing to bargain with you.
More new car sales, though, means there are less new cars out there to choose from. "Inventory is definitely dropping, especially on some of the popular clunker cars like Ford Focus, Honda Accord," says Grant. If you're looking for a specific options package, you may have to go to a dealership that's a little further away from your home in order to get it. Shop around until you find what's right for you.
Finally, be aware of scams. "If... anyone calls you or emails you... offering help to get a voucher for the program, just know that there are no vouchers," says Grant. "The dealership has everything that you need. You don't need to pay for anyone else's assistance."
For more information on Cash for Clunkers, as well as additional personal financial advice, click here to visit www.SmartMoney.com.
By Erin Petrun