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Rolling Out at You: Cash for Clunker Scams

The car ha to be driveable to qualify.
The Senate and House passed it, and Obama signed; so now we have Cash for Clunkers II, or I should say $2 billion, because that's how much the government added to the program. If you've been sitting on the sidelines with your 1996 Monte Carlo seeing everyone else cash in, there's still time -- until November 1 -- to get in on the goodies, namely, a rebate of up to $4,500 if you buy a brand-new vehicle.

Before you rush over to your friendly neighborhood dealership, however, you should know that some friendly neighborhood dealerships are not playing straight with consumers. Among the more commonplace practices:

• Holding back on delivering the new car until NHTSA (National Highway Traffic Administration) approves the paperwork;

• Requiring car buyers to sign statements that they will be liable for the rebate if NHTSA rejects it;

• Making people go home in the old clunker even though all the paperwork is in.

• Forcing buyers to leave a credit card authorization or a signed check for the amount of the rebate;

• Telling car buyers that the rebate won't be extended until after the government approves the deal.


According to NHTSA, car dealers have no business making buyers do any of these things. If you have submitted the required paperwork and the dealer has the car in his inventory, you should be able to drive it off the lot. And, the rebate is pretty cut and dried. If your new car's fuel efficiency is 4 to 9 mpg better than the clunker, you get $3,500. If it achieves savings of more than 10 mpg plus over the old car, you get the $4,500 max. The old car cannot have an mpg over 18. Also, it must be driveable. As proof, you have to show that it's been insured in the past year. At cars.gov, the government's website for the program, you can find your clunker's mpg easily. You may be surprised at how few cars qualify. In fact, lots of consumers have complained that the government isn't taking into account the fact that older cars are less efficient and don't produce anywhere near the mpg listed. Having owned a number clunkers myself over the years, I know that's true, but go fight City Hall. Just don't take it for granted that your car qualifies.

Another issue: don't get so blinded by the rebate that you let the dealer take you to the cleaners on your trade in. It may be a clunker headed for death in one of those big squishing machines, but it still has some value. For example, that '96 Monte Carlo would sell for about $650. To help you out, edmunds. com offers a calculator that helps you determine whether you're eligible for the program and how much your old heap should get on trade-in.

One more caveat: Avoid any website claiming that you have to pre-register to qualify for the program or tht they will connect you with authorized dealerships. Such sites are not in business to help you trade in your jalopy but to suck up your information -- your address, phone number and social security number.

If you've come across any C4C scams, you should reach out to the Office of the Inspector General at the U.S. Department of Transporation at 800-424-9071 or hotline@oig.dot.gov.