In the end of June this year, President Barack Obama signed the Car Allowance Rebate System (CARS) Act. The Cash for Clunkers program helps car owners purchase a new, fuel-efficient automobile after trading in a less fuel-efficient vehicle. Pursuant to the CARS Act car transactions made after July 1, 2009, are eligible for CARS program credits.

The Cash for Clunkers program offers a great deal for car buyers, the automobile industry and the economy in general by generating a considerable amount of excitement and controversy. Does the CARS program, in fact, guarantee that you will be getting a good deal?

Pros:

1. First, and the most important, car owners may be able to get rid of their old vehicle, to save a lot of money on a new car purchase.

2. CARS Act helps you purchase a more fuel efficient vehicle, thus decreasing individual owners’ and the nation’s oil consumption.

3. Purchasing a new vehicle will cut down on repair costs.

4. Taking into consideration that new vehicles are cleaner, the program will decrease vehicle exhaust emissions, lessening the impact on the environment.

Cons:

1. Through the program you will receive only $3,500 or $4,500 for the trade-in, regardless of its previous trade-in value. The program may not benefit you if your vehicle is worth more or even just about that same amount.

2. The bill will most likely generate an artificial, unsustainable boom in auto sales, which will be temporary and later the car sales will drop back to their original levels, if not lower. The fact is, a $3,500 discount only saves one about $50 per month on his/her payments, thus only those who could afford a new car payment and intended to buy one anyway will benefit.

3. While on one hand boosting the vehicle sales industry, the program will significantly harm mechanic and repair shop operations. Most small shops focus on repairing old vehicle thus if these vehicles are off the road then they stand to lose a great deal of business.

4. Not all cars will qualify for this program. The vehicle has to be old, but not more than 25 years old.