Car Allowance Rebate System - CARS

AAA

DEFINITION of 'Car Allowance Rebate System - CARS'

A U.S. government program under the Obama administration that allowed individuals to trade in used vehicles that did not meet government-specified standards of fuel economy in exchange for a discount of either $3,500 or $4,500 off the purchase or five-plus-year lease of a newer, more fuel efficient vehicle. The program began on July 1, 2009, and ended shortly thereafter because it became so popular that funds quickly ran out.

BREAKING DOWN 'Car Allowance Rebate System - CARS'

Commonly known as "Cash for Clunkers," the program's stated purposes were to reduce air pollution, to stimulate consumer spending and to prop up struggling U.S. auto manufacturers (though the program did allow the purchase of foreign vehicles). Ultimately, consumers traded in as estimated 680,000 vehicles. Car dealers were required to crush or shred the trade-in vehicles.



RELATED TERMS
  1. Cash For Caulkers

    The colloquial name for the United States' Home Star Energy Retrofit ...
  2. Fuel Tax Credit

    A federal subsidy that allows businesses to reduce their taxable ...
  3. Cash For Refrigerators

    A federal energy efficiency program introduced in the fall of ...
  4. Clunker

    A popular reference to the old vehicle traded in under the U.S. ...
  5. Cash For Clunkers

    A program that allows car owners to trade in their old, less ...
  6. Tax Credit

    An amount of money that a taxpayer is able to subtract from the ...
Related Articles
  1. Insurance

    The Government And Risk: A Love-Hate Relationship

    Though the U.S. government can help its citizens by subsidizing risky loans, the costs always come back to the taxpayers.
  2. Budgeting

    12 Car Insurance Cost-Cutters

    If car costs are dragging you down, find out how to free yourself from some of the extra weight.
  3. Personal Finance

    Top 10 Ways To Get Top Dollar For Your Car

    Find out what steps you can take to reduce the depreciation of your vehicle.
  4. Options & Futures

    Beginner's Guide To Auto Insurance

    Find the perfect policy that suits both your coverage and budgetary needs.
  5. Options & Futures

    Your Car: Fixer-Upper Or Scrap Metal?

    Sometimes buying a new car can be cheaper than shelling out for repairs.
  6. Insurance

    The True Cost Of Owning A Car

    Driving is often the most convenient way to get around, but it'll cost you.
  7. Options & Futures

    Analyzing Auto Stocks

    Find out what to consider before taking a ride with stocks from this industry.
  8. Economics

    Understanding Switching Costs

    Consumers incur switching costs when they receive a monetary or other type of penalty for changing a supplier, brand or product.
  9. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  10. Economics

    Explaining Market Penetration

    Market penetration is the measure of how much a good or service is being used within a total potential market.
RELATED FAQS
  1. What are the economic implications of government subsidies on fuel costs?

    In order to make the price of oil more affordable to its citizens, governments sometimes provide subsidies, which can allow ... Read Full Answer >>
  2. What does marginal utility tell us about consumer choice?

    In microeconomics, utility represents a way to relate the amount of goods consumed to the amount of happiness or satisfaction ... Read Full Answer >>
  3. What are some common ways product differentiation is achieved?

    There are many ways to achieve product differentiation, some more common than others. Horizontal Differentiation Horizontal ... Read Full Answer >>
  4. What is the difference between an OEM (original equipment manufacturer) and a VAR ...

    An original equipment manufacturer (OEM) is a company that manufactures a basic product or a component product, such as a ... Read Full Answer >>
  5. Is the retail sector also affected by seasonal factors?

    Generally speaking, the retail sector is highly seasonal. Almost invariably, sales in the retail sector are highest in the ... Read Full Answer >>
  6. What has the retail sector evolved to its current structure?

    Retail is the catch-all phrase for the sale of final goods to consumers; a retail transaction is considered an "end" and ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  2. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  3. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  4. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  5. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  6. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!