The government's Cash for Clunkers program was designed to provide financial incentives to U.S. consumers to trade in their older, less fuel-efficient vehicles for new, more fuel-efficient ones. The program was in effect from July 2009 through August 2009, and it provided vouchers worth up to $4,500 that could be used toward the purchase of a new vehicle.
To be eligible for a voucher, consumers had to trade in a vehicle that got 18 miles per gallon (mpg) or less in combined city/highway driving, and they had to purchase or lease a new vehicle that got at least 22 mpg. The new vehicle also had to have a manufacturer's suggested retail price (MSRP) of less than $45,000.
Under the program, participating dealerships submitted voucher requests to the National Highway Traffic Safety Administration (NHTSA), which then approved or denied the request based on whether the requirements were met. If approved, the dealership would receive reimbursement from the NHTSA for the value of the voucher plus $50 processing fee. Consumers could not apply directly for vouchers; they had to go through participating dealerships.
The Cash for Clunkers program was credited with jump-starting auto sales during a time when demand was otherwise weak due to the recession. It also helped put newer, cleaner-burning vehicles on the road, which improved air quality and reduced dependence on foreign oil imports.