Congress has extended energy efficiency tax credits for most homeowners through the end of 2010, so if you’ve been looking to upgrade your water heater or windows and doors, you can probably still get a tax credit in the coming year.  Some less common of the tax credits for home improvements will be around all the way until 2016.  From EnergyStar.gov

If you purchase an energy-efficient product or renewable energy system for your home, you may be eligible for a federal tax credit. …

Please note, not all ENERGY STAR qualified products qualify for a tax credit. ENERGY STAR distinguishes energy efficient products which, although they may cost more to purchase than standard models, will pay you back in lower energy bills within a reasonable amount of time, without a tax credit

Energy Tax Credits Extended Through 12/31/2010

So how much is the tax credit, and how do you get it?

So what does this mean?  For any qualified upgrade, the tax credit is 30% of the covered cost up to a $1500 total credit. For instance, if you pay $4000 for a central air conditioning system (excluding installation costs), your credit would be $1200.

The house must be your principal residence and the credits don’t apply to new construction. Other, upgrade-specific restrictions apply, so see the government site for details.

What Energy Efficient Products Are Eligible For The Tax Credit?

A variety of products are eligible for the tax credit, however, you need to be careful that your specific product is eligible.  Some of the products include:

• Energy efficient doors and windows.  Installation costs are not eligible for the credit. Other restrictions apply.
• Water Heaters. Credit includes installation costs; some restrictions for energy efficiency apply.
• Insulation, whether spray foam, fiberglass, or blow-in cellulose, they’re all covered so long as they meet IECC requirements. Installation cost is NOT covered.
• HVAC components, including advanced air handlers, air force heat pumps, central A/C units, boilers, propane, and gas furnaces. Tax credits include installation costs.
• Biomass Stoves.
• Metal and asphalt roofs. Credit doesn’t include installation costs.

Some of the tax credits will take into account installation costs, while other credits do not.  To find out if your product is included, and whether you can include installation costs, check the government site here.

How Do I Apply For The Tax Credit?

To claim the energy efficient products tax credit, you’ll need to claim the credit on your 2009 or 2010 taxes.

For products “placed in service” in 2009, you need to file the 2009 IRS Form 5695 and submit it with your 2009 taxes (by April 15, 2010). Currently, only a DRAFT version of the 2009 IRS Form 5695 is available (without the instructions section).  The final 2009 IRS form will be available in late 2009/early 2010.

So to claim the credit in 2010, the product will have to be placed in service in 2010.  Same for the 2009 credits. 2009 Federal Income Tax Brackets for your reference.

Frequently Asked Questions (FAQ) About The Tax Credit

Here are the answers to a few of the most frequently asked questions about the credit.

• Is the $1,500 tax credit available for each product? Can I get $1,500 for windows and another $1,500 for a new HVAC system? Can I get $1,500 in 2009 and another $1,500 in 2010? Can two people living in the same home both get the $1,500 credit? Even if you purchase multiple products you can only get a maximum of $1,500 over the 2-year period (2009 & 2010). Basically you can spend up to $5,000 during this 2 year period on a single or multiple products, for your principal residence that you own and live in, and get 30% or $1,500 (30% of $5,000 = $1,500) back as a tax credit. If you get the entire $1,500 credit in 2009, then you can’t get anything additional in 2010. (Note: the maximum does not apply to all products)
• Can the energy efficiency tax credit be carried over to future years? The tax credit for products at 30% up to $1,500 can not be carried over to future years.  But you can take part of the $1,500 in 2009, and the rest in 2010.  A few select products that are not subject to the $1500 limit can be carried forward. Find details here.
• Is there an income limit on the tax credit? No, there is no upper or lower limit on the credit, however, these energy efficiency tax credits are technically “non-refundable.” If you don’t pay any taxes, then you can’t get the credit.   Details here.

Are you planning on installing a new roof or water heater or other eligible product?  Do you plan to claim the credit next year?  Do you think the credit makes it worth it to install a new energy efficient product, or will you still hold off?  Tell us your thoughts in the comments!

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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• When Will We See An Increase In Our Paychecks Due To The Stimulus Package?
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• Time Is Running Out To Get The $8000 First Time Homebuyer Tax Credit
• Unclaimed Tax Refunds: Do You Have A Refund Waiting For You?
• What Documentation Do I Need To Claim The First-Time Homebuyer Tax Credit
• Need Tax Forms? Here Are Five Ways To Obtain Your IRS Tax Forms

If you’re a first time homebuyer and you thought that you might be out of time when it came to getting the $8000 refundable tax credit, think again!  On Friday the Obama administration signed into law the Worker, Homeownership, and Business Assistance Act of 2009 which extends the $8000 refundable tax credit through the end of June of 2010.    If you had given up looking for a house, it may be time to restart your search!

$8000 First Time Home-buyer Tax Credit Extended

The new law was agreed upon by Congress last week, and then signed into law by President Obama at the end of the week.   The extension of the tax credit does mean that there are a few changes in the provisions, including higher income limits, age restrictions and limits on home values.

• The credit is available for homes that go under contract by April 30, 2010 and close by June 30, 2010.
• First-time buyers (those who have not owned a home for three years) can continue to claim an $8,000 credit.
• Income limits: $125,000 a year for individuals, $225,000 a year for married couples. (an increase in income limits)
• Homes that cost more than $800,000 aren’t eligible for the credit.
• You must be 18 years old to claim the credit.
• Credit is available for primary residences only (no vacation homes)

$6500 Move-Up Homebuyer Tax Credit Passed

In addition to the first time homebuyer bill being extended, Congress also decided to expand the incentives for homebuyers by allowing some current owners to take part as well. Current homeowners can now buy a new home and receive a $6500 tax credit.  Details of the new incentives here:  $6500 homebuyer tax credit.

What do you think of the tax credit being extended?  Are you relieved because you just missed the deadline before?  Are you upset because you’re against the credits?  Tell us your thoughts on the tax credit extension and expansion in the comments below.

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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• 2 Compelling Reasons To Buy The Most Expensive House In Your Neighborhood
• $6500 Homebuyer Tax Credit For Current Homeowners Signed Into Law Today. Is It Retroactive?
• Senators Agree To Extend First Time Homebuyer Tax Credit And Allow Up To $6500 Tax Credit For Current Homeowners
• Lawmakers Push For An Extension Of The $8000 First Time Homebuyers Tax Credit Into 2010 In Proposed Bill

Last week I wrote about how congress was attempting once again to pass an extension of the $8000 first time homebuyer tax credit.  There had been several false starts to get an extension passed as the senate and congress weren’t able to agree on amounts of credits, whether to extend the credits at all, and whether it should be expanded to include current homeowners.

Earlier this week congress was finally able to come to an agreement on an extension of the $8000 first time homebuyer tax credit, and in addition, they added on a new $6500 tax credit for people who already own a home. This morning President Obama is expected to sign into law the Worker, Homeownership, and Business Assistance Act of 2009 that expands the popular homebuyers tax credit and extends unemployment benefits.

$6500 Homebuyer Tax Credit For Move-Up Buyers Added

For many people the most exciting news is that there will now be a tax credit for current homeowners.   The tax credit for move-up buyers will take effect after the date of enactment
(when the bill is signed).  Unfortunately for those who have already bought a house it doesn’t seem to be retroactive.

• The credit is available for homes that go under contract by April 30, 2010 and close by June 30th, 2010.
• Current homeowners can claim a $6,500 credit as long as the property they are vacating has been their primary residence for at least five consecutive years out of the last eight years.
• Income limits: $125,000 a year for individuals, $225,000 a year for married couples. (these are higher limits than before)
• Homes that cost more than $800,000 aren’t eligible for the credit.
• $6500 tax credit is not retroactive.  (from the language of the bill: “shall apply to residences purchased after the date of the enactment of this Act.”)

So to all those people who have been sitting on the sidelines hoping for a tax credit for current homeowners , some of you are in luck.  Because of the language of the bill a lot of people are still excluded (myself included), but there are still a lot of folks who will now be jumping into the home shopping game.

Will the new $6500 tax credit push  you to start looking for a new home?  Would you consider moving if there wasn’t a tax credit?  Do you think it will have an appreciable effect on the economy and the real estate market?

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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• $8000 First Time Homebuyer Tax Credit Extension: Take Advantage Of Incentives Through June 30th, 2010
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The past couple of months we’ve talked quite a bit about the Cash For Clunkers program, how it worked, and who could expect to receive a voucher towards the purchase of a new car. People were split down the middle as to whether the voucher program was even a good idea, with some saying it was just another example of wasteful government spending – while others said it was a great way to stimulate spending and boost our economy.

We may now have another cash for clunkers type program to debate.  Earlier this year as a part of the American Recovery and Reinvestment Act a new program was announced that would allow people to receive rebates that would be good towards the purchase of a new ENERGY STAR® rated appliance to replace their less efficient models.

U.S. Department of Energy Secretary Steven Chu today announced the availability of nearly $300 million in funding from the American Recovery and Reinvestment Act for state-run rebate programs for consumer purchases of new ENERGY STAR® qualified home appliances.  The new program underscores the Obama Administration’s commitment to make American homes more energy efficient, while helping to support the nation’s economic recovery.

“Appliances consume a huge amount of our electricity, so there’s enormous potential to both save energy and save families money every month,” said Secretary Chu.  “These rebates will help families make the transition to more efficient appliances, making purchases that will directly stimulate the economy and create jobs.”

The new funding will be awarded to states and territories, through their energy offices, using a formula set forth in the Energy Policy Act of 2005.  Each state or territory is required to submit a plan that specifies which ENERGY STAR® appliance categories will be included in their rebate program, the rebate level for each product type, how the rebates will be processed, and their plan for recycling old appliances.  States and territories must first file an initial application expressing their intent to participate by August 15, 2009, followed by a full application by October 15, 2009. Approximately 10-25 percent of each award will be spent on administrative costs.

The goals of the program were to spur economic growth, create jobs, save energy and reduce greenhouse gas emissions.  How successful it will be in those goals is anyone’s guess.

Depending on which state you’re in, there is a different amount of money available to use towards rebates, so it is probably best to move on it as fast as you can once the program starts.  To find out how much money your state has to use towards appliance rebates, check this document.

How Do I Take Part In The Cash For Appliances Program?

The program will start some time late fall 2009, and program details will vary state by state.  The states will have the ability to say which appliances are eligible, along with how much of a rebate consumers would get. The energy department has set a deadline of October 15th for states to file formal applications for the program.  Details should become clearer for your state at that time.

Although the details will vary state to state, basically the program will authorize rebates to consumers of $50-$200 for purchases of more efficient household appliances. Unlike with the Cash For Clunkers program, people who take part in the program won’t have to trade in their old appliances. (thank goodness for that!)  It is also expected that the rebates will be stackable along with other rebates currently available.  So if your municipal district offers a $100 rebate towards a refrigerator, you would get that in addition to the federal rebate.

The Energy Dept. expects the bulk of the $300 million to be awarded by the end of November.

What Appliances Are Eligible For The Rebate?

To qualify for the rebate the new appliance must be ENERGY STAR® rated.  Qualified appliance categories eligible for rebates may include (depending upon your state):

• central air conditioners
• heat pumps (air source and geothermal)
• boilers
• furnaces (oil and gas)
• room air conditioners
• clothes washers
• dishwashers
• freezers
• refrigerators
• water heaters

Let The Marketing Push For “Cash For Refrigerators” Begin!

Major appliance manufacturers have been feeling the pinch the past couple of years, with sales dropping and plants being shut down.

The leading appliance makers have felt the pinch. Whirlpool of Benton Harbor, Mich., which controls about 40% of the U.S. market, has seen its sales drop 20% through the first two quarters of this year. North American shipments for its Stockholm-based rival Electrolux, meanwhile, have dropped for a dozen consecutive quarters. Both companies have laid off hundreds of workers, and General Electric (GE) mulled shutting down an entire refrigerator plant earlier this year until deciding to keep it open with a reduced workforce.

Once the program begins I’m sure we can expect to see a huge marketing push, just as we saw with the Cash For Clunkers program.  Anything the appliance manufacturers can do to help spur sales will be helpful for them.  On the other hand, many are doubtful that the program will have much effect because the value proposition in receiving a smaller rebate for an appliance as opposed to a $4500 voucher for an old car just isn’t as motivational.  Many people will probably be able to get by with their old appliance for a while longer.  The manufacturers are hoping that’s not the case.

What do you think about the Cash For Appliances rebate program?  Does it make you more likely to buy a new fridge, dishwasher or water heater? Tell us what you think in the comments!

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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• Cash For Clunkers Gets A $2 Billion Cash Infusion And Rises From The Dead.. For Now
• Cash For Clunkers Program Suspended After Only A Few Days. Here Is Why
• Cash For Clunkers Voucher Program Is Now Available. Things To Keep In Mind When Trading In Your Gas Guzzler.
• Common Questions About The Cash For Clunkers Program Answered: Gas Guzzler Rebate FAQ

I’ve written quite a bit about the cash for clunkers program here on Bible Money Matters in relation to how the program worked, who qualified for the rebate, and how you could go about redeeming your voucher.

The program has now run its course, and now that the excitement has died down people are beginning to wonder if there are any other consequences to the program, specifically when it comes to their taxes.

Cash For Clunkers And Federal Taxes

Many people were concerned that when it came to their federal taxes they might have to treat the $3500-$4500 voucher as taxable income.  When you go to the government’s website, however, they are quick to dispel that notion.  From the cars.gov FAQ:

Is the credit subject to being taxed as income to the consumers that participate in the program? NO. The CARS Act expressly provides that the credit is not income for the consumer.

Since the credit is not treated as taxable income, you won’t have to pay taxes on the voucher for your federal income taxes.

The question still remains, however, will you have to pay state taxes on the voucher/credit?

Cash For Clunkers And State Taxes

The question of whether you’ll have to pay taxes on the credit for state taxes is a bit more murky. From the cars.gov FAQ:

Do I have to pay State or local sales tax on the amount of the CARS program credit? MAYBE. The question of whether a consumer must pay State or local sales tax on the amount of the CARS program credit depends on the sales tax law of each State or locality. Consumers should review the law of their respective States or consult a tax advisor to answer this question.

So the answer is that  yes, you might have to pay taxes on the credit if your state and local authorities say you have to.   I don’t want to post an entire list here of which states do and don’t count the credit as taxable income, but one of my blogging colleagues put together a pretty good list. You can find it here:

Cash For Clunkers Tax Rules

Other Cash For Clunkers Reading:

• Cars.gov – Government’s Official Website
• More Cash for Clunkers Tax Rules
• Cash for Clunkers Taxes for State
• Cash for Clunkers Tax
• Does Cash for Clunkers Affect Your Taxes?

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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• What Documentation Do I Need To Claim The First-Time Homebuyer Tax Credit
• Need Tax Forms? Here Are Five Ways To Obtain Your IRS Tax Forms
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A few months ago we wrote for the first time about the $8000 first time homebuyer tax credit that the Obama administration passed as a part of the 2009 stimulus bill. The measure was aimed at helping to improve the real estate market that has taken such a huge hit over the past year. They wanted to get the market moving, and get first time homebuyers interested in buying a home instead of just sitting on the sidelines as they have been.

By and large the measure has gotten quite a few people back into the buying process, up to a 1/3 of all sales of existing homes in the past few months have been to first time buyers.  Even so, there are still quite a few people biding their time trying to find the perfect house.  But the time to claim the tax credit may be running out.

$8000 Tax Credit Expires December 1st 2009

The $8000 tax credit is a great deal for people who are first time home buyers.   But let’s review the tax credit and it’s provisions:

• First-time buyers can claim a credit worth $8,000 – or 10% of the home’s value, whichever is less – on their 2008 or 2009 taxes.
• To qualify for the credit, the home must be purchased between Jan. 1, 2009 and Nov. 30, 2009.
• You cannot have owned a house for the past three years to qualify as “first time” buyer. You also must live in the purchased house for at least three years, or you will be obligated to pay back the credit.
• To get the credit, homebuyers have to earn less than $75,000 for singles or $150,000 for couples. If you make more than that you may qualify for a partial credit.

Getting the credit should be pretty easy, just claim it on your return.  One caveat, however.  You have to close on your new house by  November 30th.   That may sound like it’s a long way off, but in reality it’s coming a lot faster than you think.

You may think that you’ll be able to close on your new home right before the November 30th deadline, but you’d probably be wrong. Consider this – according to themortgagereports.com the end of November 2009 will not be a good time to close on your new home:

This is when it starts to get messy.  Check out the calendar.

• November 30, 2009 is the Monday after Thanksgiving Weekend.
• November 28-29, 2009 is a weekend.  No closings on weekends.
• November 27, 2009 is the Friday after Thanksgiving — an unofficial holiday.
• November 26, 2009 is Thanksgiving — an actual holiday. No closings.
• November 25, 2009 is the day before Thanksgiving — a national “half-day”.

So, that backs up the November 30, 2009 first-time home buyer tax credit deadline by 6 days to November 24, 2009 — a Tuesday.

The end of November is thrown for a loop because of the Thanksgiving holidays, and when you’re talking about trying to squeeze in a closing in all that madness, you had better be extremely lucky.   Instead it is suggested that you try and schedule your closing for at least the week of November 16th, just to give yourself some breathing room for things that can often come up in the buying process (problems with the final walk-through, mortgage documentation problems, etc).

Now when you think about closing on a home around November 16th, and considering that normally closings are done 60 days out by default (can be negotiated down in some cases), that means that you would have to put in an agreement on a house by September 16th in order to close on your house in time – that’s only about 3 weeks away!

3 Weeks And Counting To Find Your House!

So this post is a cautionary one in case you’re still considering buying your first home using the first time homebuyers tax credit.    It’s time to get cracking, time to find the house that you want to buy, and time to put in a purchase agreement.  If you wait too much longer, you may find yourself with the short end of the stick and no $8000 tax credit!

Are you considering buying a home using the $8,000 tax credit?  Did you realize that the time to find your new home was so short?   Have you already bought your new house and filed for the tax credit? Tell us about your story in the comments!

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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We’ve been talking a lot recently about the Cash For Clunkers program, and how the program has been successful by some standards, and troubled in other ways.  The program ran out of money one week after it launched, and was only re-launched after congress passed another 2 billion dollars for the program.

Now the program is beginning to run out of money again.  The Obama administration has announced that the Cash For Clunkers program will end on Monday:

The popular Cash for Clunkers program will end on Monday at 8 p.m. Eastern time, the Obama Administration said Thursday.

As of Thursday, the Administration said the Clunkers program, officially the Car Allowance Rebate System, had recorded more than 457,000 dealer transactions worth $1.9 billion in rebates.

“Applications for rebates will not be accepted after 8 p.m. EDT Monday and dealers should not make further sales without receiving all the necessary paperwork from their customers,” the Administration said in a statement.

The Administration expressed confidence that money would be available to pay all eligible rebates. A total of $3 billion has been allocated to the program.

The Department of Transportation “has been very focused on making conservative assumptions about this program, and it’s precisely why they’ve announced the winddown at this moment,” a senior Administration official said.

The Administration has countered recent complaints of payment delays by saying that many of the applications to the program from dealers have been incomplete and needed additional review or had to be sent back.

Want to take advantage of the program before it runs out?  Don’t forget to read our posts detailing the program, and get to your participating dealer before 8pm eastern on Monday!

• Cash For Clunkers Eligibility
• Common Questions About The Cash For Clunkers Program Answered; FAQ

Also, if you’re signing a deal this weekend, be careful of what you’re signing as some dealers are adding clauses to the contract stipulating that you will have to pay them back for your clunker rebate if the voucher is denied by the government.

Dealers Opting Out Of Cash For Clunkers

In the last week or so a large number of dealers have been opting out of the Clunkers program as they have been having major problems even getting paid for the Clunker deals that they have signed and sent to the government for approval.   In a cash important business like the car business, this could be a huge problem for a lot of dealers.

Some dealers..  already have stopped participating in the $3 billion Cash for Clunkers program. On Wednesday, Transportation Secretary Ray LaHood sought to assure dealers that they will be reimbursed for money they have essentially fronted to customers buying cars.

“They’re going to get their money,” he said.

The Greater New York Automobile Dealers Association, which represents dealerships in the New York metro area, said Wednesday that about half of its 425 members had left the program because they could not afford to offer more rebates. They also are worried about getting repaid.

In the Kansas City area, program delays prompted Randy Reed’s Buick-Pontiac-GMC and Nissan dealerships to stop participating in Cash for Clunkers on Monday. Including a dealership in St. Joseph, Reed said his stores had not been reimbursed yet for about 40 deals.

“It seems like a program the government has mismanaged from the start,” he said. “Our number one goal is not do anything to put ourselves at risk with our customers. None of us can afford the kind of losses we’re looking at if we continue participating and don’t get reimbursed.”

I for one am not sad to see the Cash For Clunkers program go.  The program, while popular (anytime you “give something away” it’s probably going to be popular), has been beset with problems.  The aim of trying to have a positive environmental impact is dubious at best with even environmental groups saying they aren’t impressed. The economic impact isn’t really agreed on either with some experts like Alan Greenspan saying that he didn’t think that the program stimulated the economy. Add to that the fact that the program has probably moved many people into a worse debt situation than they were in previously, and I am actually happy that the program is over!

What do you think?  Are you going to be taking advantage of the program in it’s last weekend?  Are you glad to see the program go?  Do you think all of these dealers with pending deals will get paid, or will the government stiff them? Let us know what you think in the comments!

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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• Democrats Hope To Pass A Second U.S. Stimulus Bill By Early 2010
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More Cash – For Cash For Clunkers

It was only a week ago that we were talking about how the Cash For Clunkers program had only been active for a week, and it was already running out of money.  $1 billion dollars had been assigned to the program and after demand for the vouchers was much larger than anticipated, the program had to suspended.   The government didn’t want people trying to get a voucher that was no longer available.

Now, a week after the program was suspended, Congress has decided,  that the program was such a rousing success, that they should give it another $2 billion dollars.   Last night they approved an extension of the program:

The U.S. Senate approved and sent to the White House on Thursday a $2 billion extension of the “cash for clunkers” autos sales incentive program.

The measure, approved by 60 to 37, extends the successful program that has raised sales of the U.S. auto industry.  President Barack Obama was expected to sign it quickly.

The initial $1 billion of funding approved in June for “clunker” business has generated more than $920 million in rebates and more than 220,000 in auto sales.

Supported by the incentive program, U.S. auto sales overall were down about 12 percent in July from a year earlier, but it was their best performance this year.

A poll was done last week asking a sampling of Americans if they thought the program should get more money.  54% of the respondents said that it shouldn’t.  Despite a majority of people being against the added expenditure, the program will now be continued.

The swift “success” of the program was stunning to a lot of people, and to some degree the government wasn’t ready for the deluge of voucher submissions that happened in the first week.

The administration, stunned by the swift success of the initiative and stung by a series of administrative glitches in trying to process rebates, had warned that the “clunker” measure would be suspended if more money was not approved by week’s end.

The House of Representatives passed the $2 billion extension on July 31. The Senate took a week to affirm that action.

Some senators did introduce amendments to the bill in order to try and kill the measure, but those were soundly defeated – and the program was approved for more money.   So if you had planned on trading in your clunker, you may still have time – but act quick!  Who knows when it will run out this time.  For more details about the program, who is eligible, and what you need to do, check out these articles on our site:

• Cash For Clunkers Eligibility
• Common Questions About The Cash For Clunkers Program Answered; FAQ
  

Not Everyone Is Happy With The Program

Some critics argue that while the program was successful in handing out vouchers to thousands of car buyers, that the program isn’t truly as much of a boon to our economy and the environment as is being suggested.

Groups that aren’t as happy with the program as car dealers?  Mechanics,  scrap yard operators and automotive aftermarket parts dealers.

Who doesn’t like the government’s “cash for clunkers” program? Your mechanic, for one.

Owners of automotive repair shops say the program to help invigorate sales of new cars is succeeding at their expense.

Bill Wiygul, whose family owns four repair shops in Virginia, said he has already had five or six customers decide against repairs. A man who sits on the board of Mr. Wiygul’s bank traded in his car rather than repair it. “He’d been a customer at our Reston store since it opened,” Mr. Wiygul said….

How do we get on the special interests, special treatment bandwagon? How much is it going to cost me and to whom shall I send the check?” he said. “Who picks the winners in this game ’cause obviously the game is fixed.”

So the government is subsidizing one industry (in which it now holds a large stake) at the expense of other small business people like mechanics and repair shops.

The automotive aftermarket, a $250 billion industry that employs about 4.6 million people, could be among the biggest losers in the clunkers program, said Kathleen Schmatz, head of the Automotive Aftermarket Industry Association: “It’s everybody from the Fortune 500 parts manufacturer all the way through the supply chain to the independent repair shop.”

The group that lobbies for independent mechanics in Washington agreed.

“This package will hurt mechanical repairs without question. You are taking older vehicles that are still fine to use and removing them,” said Robert Redding Jr., the Automotive Service Association’s Washington representative. “If you’re taking hundreds of thousands of vehicles that you normally service off the road with no consideration, it hurts people.”

Has The Program Helped The Environment Or Stimulated The Economy?

Even if you dismiss those who have been hurt as having sour grapes, you still need to consider whether the program will actually succeed in it’s aims of helping the environment and stimulating the economy.  So, first, did it help the environment?

Cash for clunkers could have the same effect on global warming pollution as shutting down the entire country — every automobile, every factory, every power plant — for an hour per year. That could rise to three hours if the program is extended by Congress and remains as popular as it is now.

Climate experts aren’t impressed.

Compared to overall carbon dioxide emissions in the United States, the pollution savings from cash for clunkers do not noticeably move the fuel gauge. Environmental experts say the program — conceived primarily to stimulate the economy and jump-start the auto industry — is not an effective way to attack climate change.

So it sounds like the program will have a negligible effect on the environment – especially when you  take into account the scrapping of all the working cars that could have otherwise been kept running for years to come.  How about stimulating the economy?  Alan Greenspan says that while he supports the program, he doesn’t think that it helped to stimulate the economy.

The former head of the Federal Reserve gave a thumbs-up to the cash for clunkers program but said Sunday it is popular only because the economy was on its way back up and not because it was stimulative.

Alan Greenspan said that the program has worked to get people to buy cars and move stock, but he wouldn’t necessarily recommend it as an economic fix.

“It’s an interesting issue. I mean, I have qualms about the concept, but there is no doubt that that very extraordinary response is a very important indicator that the state of confidence in the economy is beginning to pick up. If we had been — the clunker program had been put in place six months ago, it would have probably been a dud,” Greenspan said on ABC’s “This Week.”

So the program has been successful in Greenspan’s eyes, but only because the economy was already starting on it’s way to a slow recovery.

Still, the administration and many in congress are hailing the program as a marvelous success, and say that it is one of the main reasons for a rebound that is beginning to happen in our economy.

What do you think about the program? Has it been successful in it’s aims, and was it a good idea?  Or do you side with the critics of the program and think that the program is just another government money drain? (can  you tell which side I come down on?)  Let us know your thoughts in the comments.

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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The Cash For Clunkers program has only been active since last Friday, but word is now leaking out that the CARS program will be halted at midnight on Thursday July 30th, less than a week after it launched.  The problem?  There are fears that the program may have already run out of money.  The program was to run until November 1st, or until the funds were depleted. It appears the funds have been depleted! From Fox News:

The government plans to suspend its popular “cash for clunkers” program amid concerns it could quickly use up the $1 billion in rebates for new car purchases, congressional officials said Thursday.

The Transportation Department called lawmakers’ offices to alert them to the decision to suspend the program at midnight Thursday. The program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle.

The congressional officials spoke on condition of anonymity because they were not authorized to speak publicly. Rae Tyson, a spokesman for the National Highway Traffic Safety Administration, which administers the program, declined comment.

So it seems that the program has been either been much more successful than anticipated, or the government bureaucracy is just too slow to keep up with all of the deals that dealers are sending their way. 

Congress last month approved the Car Allowance Rebate System program, known as CARS, to boost auto sales and remove some inefficient cars and trucks from the roads. The program kicked off last Friday and was heavily publicized by car companies and auto dealers.

Through late Wednesday, 22,782 vehicles had been purchased through the program and nearly $96 million had been spent. But dealers raised concerns about large backlogs in the processing of the deals in the government system, prompting the suspension.

A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program.

“There’s a significant backlog of ‘cash for clunkers’ deals that make us question how much funding is still available in the program,” said Bailey Wood, a spokesman for the dealers association.

So now that the Cash For Clunkers program is suspended, a lot of people who thought they had time to do a deal may not be able to cash in.  The question now is, will congress allocate more money for the program so that more people can take part? Was it successful enough, and did it have the effect that they were hoping?

Even before the suspension, some in Congress were seeking more money for the auto sales stimulus. Rep. Candice Miller, R-Mich., wrote in a letter to House leaders on Wednesday requesting additional funding for the program.

“This is simply the most stimulative $1 billion the federal government has spent during the entire economic downturn,” Miller said Thursday. “The federal government must come up with more money, immediately, to keep this program going.”

Brendan Daly, a spokesman for House Speaker Nancy Pelosi, D-Calif., said they would work with “the congressional sponsors and the administration to quickly review the results of the initiative.”

General Motors Co. spokesman Greg Martin said Thursday the automaker hopes “there’s a will and way to keep the CARS program going a little bit longer.”

Friday morning there is already talk of Congress passing a 2 billion dollar extension to the cash strapped program, and the White House is saying the program will be available at least through the weekend. Read details of that here.

Now that the program may be extended – the question remains. Should it be?  There are already reports of dealers having huge problems getting CARS deals approved, some even being rejected for silly reasons – when the clunker cars have already been destroyed.  That means many dealers will be losing money on those rejected deals because they can’t sell the destroyed cars.  Add to that the fact that the program is a bureaucratic nightmare – with the government not approving deals  in a timely fashion, the government website constantly going down – and the dealers are now extremely worried about cash flow problems.  All of that means you have the making of a huge fiasco.

What do you think? Will the government pass legislation assigning more money to this program?  Will they find that the program has had the stimulating effect that they were hoping?  Is this program just another way for government to waste our money, and will it end up being more trouble than it was worth? Tell us what you think in the comments!

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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Clunkers For Cash Active As Of July 1st

The Cash For Clunkers program has been active as of July 1st, and if you have an eligible car, you can now take advantage of the program.  As a quick refresher, what vehicles are eligible for $3500-4500 voucher?

• Must be in drivable condition.   (That means you can’t tow in that truck on blocks sitting in your front yard)
• Has to have been continuously insured to the same owner for at least one year immediately prior to trade-in. (That means you can’t just go out and buy a cheapo old truck to trade in)
• Manufactured in model year 1984 or later, so 25 year old or newer cars.
• Have a combined fuel economy of 18 mpg or less.  Get anything more than that, and you’re out of luck!

You get either a $3,500 or a $4,500 voucher towards your new car, depending upon the increase in mpg  in old car to new car.  To find out the MPG of your old car vs. a new car, check out this website.

For a video presentation talking about the program, take a look at this video:

Video Detailing The CARS Program From KBB

UPDATE: Some Cars Are No Longer Eligible

If you checked previously to find out if your car is eligible – you’ll want to double check to make sure.  The EPA has revised fuel-efficiency ratings in preparation for the CARS program, and upwards of 100 vehicles had their mileage figures changed.  This means that some vehicles are no longer eligible (while others have now become eligible).

As it prepared for its “cash-for-clunkers” program, the government rejiggered gas mileage figures on about 100 older vehicles last week in a way that changed whether they would be eligible for up to $4,500 in sales inducements.

The Environmental Protection Agency says the changes resulted from a double-check of its fuel-efficiency ratings on more than 30,000 1984 and newer vehicles in advance of the official start of the clunkers program Monday.

About half  of the 100 suddenly did not qualify because their combined mileage rating was revised upward; others unexpectedly got in.

The result of this change?  Some people that had car deals ready to be completed are no longer eligible and are out of luck.  They’re obviously not happy about it.  Be sure to make sure your car is STILL eligible.  *(hat tip to commenter Chris)

Cars Consumer Bill Of Rights

The government website lists a bunch of consumer rights related to the CARS program. I thought I would reprint them here for your reference:

Qualified consumers may participate in the CARS Program between July 1, 2009 and November 30, 2009 on authorized funds are no longer available.

Qualified consumers will receive a credit of $3,500 or $4,500 for an eligible trade-in toward the purchase of lease of an approved vehicle under CARS Program.

Qualified consumers will receive the $3,500 or $4,500 credit at the time they purchase their new vehicle.

Dealers must provide consumers with any other advertised rebates or discounts in addition to the credit they receive through the CARS Program.

Consumers should expect to conduct their deals at their dealership of choice, not on the Internet.

Consumers should expect the dealers to provide their best estimate of the scrap value for their eligible trade-in vehicle. Dealers are allowed to deduct $50 from this value for their administrative costs.

Consumers should expect that all information collected through the CARS Program will be kept confidential. Social Security numbers are not required for a CARS transaction.

Questions That Need Clarification

I’ve posted about the Cash For Clunkers program twice before.

• Cash For Clunkers
• Cash For Clunkers FAQ

In those posts the commenters brought up a lot of good questions about the program.  Here are a few of the more popular ones:

1. Can I trade in one vehicle type for another vehicle type? Yes.  As long as you’re trading it in for an eligible vehicle type, you could trade in a van and buy a car.  Motorcycles are not eligible.
2. Can the person who owns the “clunker”  buy a car for someone else in the family? According to the CARS helpline (866-CAR-7891 (866-227-7891)), you can do this.
3. I have a lease and it is due to expire soon. Does the program apply to leased cars that qualify as “clunkers”? No, leased cars do not qualify as you don’t own the vehicle and can’t turn it in to be destroyed.
4. My car qualifies, but it has a salvage title. Can I still participate in the program? The language of the bill doesn’t exclude salvage titled cars, so as long as the car meets the other qualifications, you should be fine.
5. When does the program actually start? Vehicle purchases are eligible for the CARS program starting July 1st.

As always, please confirm any questions you might have about your car’s eligibility by calling the CARS helpline  at 866-CAR-7891 (866-227-7891)

Alternatives To Cash For Clunkers

There are alternatives to cash for clunkers for those that don’t qualify for the program.   Some are obvious – others not as much.

• Sell your car in a private party sale:  While it may be more hassle, you may end up getting more for your vehicle than if you traded it in for the CARS program.  Even if you don’t, you’ll still probably make something that you can use towards the purchase of a nice used car!
• Donate your clunker: While the government has made doing this not as attractive with recent changes to tax law, you can still claim a deduction on your taxes for the actual sale price of your clunker.  See the donation tax laws here.
• Trade it in:  You can still trade your vehicle in at the dealership if you don’t want to bother with a private party sale.  You may not get as much for it, but you’ll still get something for it -and you can use it towards the purchase of a used car, instead of a new car!
• Keep it: Many people aren’t even considering this option – but why not?  If the car is still running well, you may as well just keep it, and drive it till it dies!  You’ll save a ton of money!

Have you taken advantage of the Cash For Clunkers program?  Was the process handled well at the dealership?  Did you decline to do the deal because you were better off selling or trading your car in? Tell us about your experience in the comments!

UPDATE: The program has been suspended after less than 1 week. Find the details here.

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

Related Posts

• Cash For Clunkers Rebate Program Might Save You Money On Your Next New Car Purchase. But Is It A Good Idea?
• Cash For Clunkers Program Is Dead Again. Gas Guzzler Trade-In Program Ends Monday.
• Cash For Clunkers Program Suspended After Only A Few Days. Here Is Why
• Common Questions About The Cash For Clunkers Program Answered: Gas Guzzler Rebate FAQ
• Democrats Hope To Pass A Second U.S. Stimulus Bill By Early 2010
• Cash For Appliances Government Stimulus Rebate Program Will Give Money For Old Refrigerators, Washers And More