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.