Cash For Clunkers

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DEFINITION of 'Cash For Clunkers'

A program that allows car owners to trade in their old, less fuel-efficient vehicles in exchange for more fuel-efficient vehicles. Although commonly referred to as "cash for clunkers", the formal name for the program in the U.S. is the Car Allowance Rebate System (CARS). The CARS program gives people who qualify a potential credit of up to $4,500 depending on the vehicle purchased.

BREAKING DOWN 'Cash For Clunkers'

The Car Allowance Rebate System (CARS) was signed into law by President Obama in July of 2009 and will be administered by the National Highway Traffic Safety Administration (NHTSA). If you qualify, once you purchase a car, the dealer will submit all the required information to the NHTSA.

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