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Jan.15

10:25 AM ET

Thursday, 15 Jan 2009

Congress And Its Cash For Clunkers Bill

Posted By:Phil LeBeau

Sectors:Oil and Gas

Companies:Toyota Motor Corporation | General Motors Corp | Honda Motor Company, Ltd. | Ford Motor Company

Gas-guzzlers
iStockphoto
If there was ever a time to take the plunge and by that new, or at least newer car, this could be it.

Congress is considering a "Cash for Clunkers" bill that would give people a $4,500 voucher to trade in their "gas guzzlers" for certain fuel efficient models.

In my opinion this is the ultimate win/win for buyers, dealers, and the auto makers.

• Buyers get help in buying a newer model that will get better mileage, and therefore help them save money. Granted, $4,500 ain't exactly winning the lottery, but it's something. With the economy in the tank, every little bit will help a lot people make the numbers work to buy a car.

• Dealers benefit by having a new incentive program spur traffic. Yes, consumer confidence is still the main reason sales are depressed, but these vouchers could spark more showroom traffic and ultimately sales.

• Auto makers would be helped by having a program that could push demand, especially for more fuel efficient models. With cars lasting longer, even gas guzzlers are holding up. Lately, that's made people say, "ok, I may not like this boat I'm driving, but it does the job for now."

• The environment would also get a break as this program could take tens of thousands gas guzzlers off the street. By one estimate, the program could save 40,000-80,000 barrels of motor fuel a day at the end of the offer.

So what's the catch? There are several.

• Your gas guzzler has to get fewer than 18 mpg.

• The new or used model you are buying has to exceed the federal fuel economy rating for its vehicle class by at least 25%

• The car you are buying can not cost more than $45,000

• The new or used ride must be no older than a 2004 model.

And depending on whether you are buying a new or used model, and the year of the gas guzzler you are trading in, the amount of your federal voucher or tax credit would vary.

For example, some new people trading in a newer or more recent car will qualify for $4,500. By comparison, people ditching guzzlers made before 1998 may only get $2,000. Regardless, the amount of the voucher, people will get something.

So there you have it. You can trade in the beast, and save some money in the process.