The federal government's Car Allowance Rebate System (CARS), known as the "Cash for Clunkers" program, officially begins in about three weeks. The program gives Americans a voucher worth up to $4,500 toward the purchase of a new car when they turn in an older, less-efficient car. It launches July 23 -- unless you're buying a Hyundai. In that case, it's already started.
Autoblog reports, "Hyundai has decided that its customers don't have to wait. Alexandria Hyundai in Alexandria, VA has already accepted the first trade-in and doled out its first rebate." The first clunker to line up for the crusher? A 1995 Ford Explorer, which averages 15 mpg. Taking its place will be a brand new Hyundai Elantra Touring edition, which is rated at 26 mpg. Katherine Michon of Arlington, VA collected the full $4,500 for the 11 mpg boost.
But wait...how is Hyundai accepting trade-ins early?
The Los Angeles Times explains, "South Korea's largest carmaker, is advancing money to U.S. dealers so they can immediately take advantage" of the government's program. The payments cover new-vehicle credits for consumers until the federal government completes rules for the program this month and begins paying dealers, Hyundai spokesman Chris Hosford said Thursday."
The government will not be paying vouchers to Hyundai dealers early. In fact, the Detroit Free Press reports, "Dealers bear the risk of the liability for the payments should the transactions not qualify once the clunkers rules are put out." But Hyundai is apparently confident that it knows enough about the eventual rules to begin accepting trade-ins now on the assumption that they will qualify for vouchers after July 23.
We would advise shoppers to be wary of any dealership that offers to complete a voucher-financed deal ahead of schedule, and be certain that the dealership assumes the risk of the government denying the voucher. A website the Department of Transportation has set up to administer the program explains, ""If dealer choose to structure a transaction before the final rule is issued, they will bear the risks associated with later demonstrating that the transaction meets all of the specifications of the final rule." If a dealership offers to process a transaction early, buyers should make sure they receive the credit immediately, and not on July 23. The website explains, "The dealers should...give the credit to the consumer at the time of such transaction. The dealer would be reimbursed by NHTSA later if the dealer registers and submits."
For details on how to qualify for the government's program, see our Cash for Clunkers FAQ.
To keep up to date on the latest developments, check out our Cash for Clunkers news page, where we've gathered the latest cash for clunkers news and what it means for you all in one place. If you already know which car you want, you can contact local dealers here.