I thought I was ahead of the curve when I wrote for Entrepreneur recently that the federal Car Allowance Rebate System--a new program that refunds up to $4,500 to consumers who trade in a gas-guzzler for a more fuel efficient car--might run out of money in less than a month, well before the end of its three-month planned duration. But turns out my sources were too conservative in their estimate--the $1 billion rebate program was out of money in about four days flat, and only kept going through last weekend with a last-minute House approval of $2 billion in additional funding. The official program site says CARS is still operational, but cautions consumers to keep checking back for the latest news.
The trick is, the Senate has not yet approved the house's appropriation. And if it doesn't by Friday, likely that funding won't come anytime soon, as our federal legislators are all headed home for summer break.
Even if it does pass, it's unclear how much more time that will buy consumers. Some dealers have continued making CARS deals into this week, essentially already eating into the additional funding. If consumer participate at the same rate we experienced in the program's first week, simple math would tell us that $2 billion more will only extend the program for another week or two.
Feeling nervous about the situation, some dealers stopped doing CARS deals earlier this week, afraid to get stuck for the $4,500 they're crediting customers who qualify. Republican Senators have expressed ire that $4,500 is a lot to pay consumers who wanted to buy a car anyway, and may want to tinker with the program's parameters to demand more of a fuel-efficiency gain in the CARS deals. There's so much confusion in the marketplace about whether the program is currently running that my local paper ran a Q&A from Associated Press to answer consumer questions.
The bottom line: If you were hoping to trade in a business or personal vehicle and get a $4,500 CARS rebate, better get cracking. Be sure to call ahead to find out if the dealer you plan to visit is still doing CARS deals, and if they still have the car you want to buy -- many fuel-efficient new car models are in short supply at this point
The good news for consumers is that if the program runs out of money, dealers are on the hook for the rebate, not car buyers. If a dealer is willing to give you the CARS rebate, you're good.
One other new twist: The EPA updated its fuel-economy info on July 24, and the update disqualified 78 car models and qualified 86 new ones for CARS rebates. So be sure the vehicle you want to trade in still qualifies as a clunker.