DEFINITION of 'Clunker '

A popular reference to the old vehicle traded in under the U.S. government's "cash-for-clunkers" program, rolled out in 2009, for a newer more fuel efficient vehicle. For a "clunker" to be eligible for the program it must have satisfied four conditions:

1) It has to be in drivable condition;
2) It has to have been continously insured for one year prior to the trade-in;
3) It has to have been manufactured more than 25 years ago on the date of trade in;
4) It has a combined fuel efficiency of 18 miles per gallon or less.

BREAKING DOWN 'Clunker '

The cash-for-clunker program in the U.S. offered drivers of old "clunkers" up to $4500 voucher for trading in their old car for a newer fuel-efficient vehicle. If an old vehicle was worth more than $4500, then the program would not have been beneficial as the vehicle owner could have just sold their car to the dealer.

RELATED TERMS
  1. Car Allowance Rebate System - CARS

    A U.S. government program under the Obama administration that ...
  2. Alternative Motor Vehicle Credit

    A tax credit given to individuals who purchase vehicles that ...
  3. Gas Guzzler Tax

    An additional tax on the sale of vehicles that have poor fuel ...
  4. Qualified Electric Vehicle

    An electric vehicle that qualifies the owner to claim a nonrefundable ...
  5. Business Automobile Policy - BAP

    An insurance policy that covers a company's use of cars, trucks, ...
  6. Advanced Technology Vehicle Manufacturing ...

    A U.S. Government subsidy created under section 136 of the Energy ...
Related Articles
  1. Personal Finance

    4 Ways Rising Fuel Costs Influence The Auto Industry

    Though fuel efficient cars may cost more up front, they are expected to significantly reduce the amount of money spent on gas.
  2. Investing

    9 Easy Ways To Increase Your Gas Mileage

    Improved gas mileage is good for you, good for your car and good for the environment.
  3. Personal Finance

    Used Car Shopping: How To Avoid A Lemon

    Being prepared before buying will save you thousands in the long run.
  4. Personal Finance

    The Complete Guide To Buying A Used Car

    Everything you need to know about buying a used car.
  5. Personal Finance

    Your Car: Fixer-Upper Or Scrap Metal?

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

    U.S. Government Outlines Policy for Autonomous Vehicles

    The focus of the policy will be to facilitate “responsible introduction” of self-driving vehicles in order to make transportation safer, cleaner, more accessible and more efficient.
  7. Retirement

    Is It Worth Buying a New Car If You're Already Retired?

    You have to consider more than just the purchase price: Insurance, the warranty, resale value and how much you plan to drive are all important factors.
  8. Insights

    6 Countries That Produce the Most Cars

    With over 90 million cars manufactured in 2015, the automobile industry is a massive global market led by six countries.
RELATED FAQS
  1. When buying a car, is it better to have a trade in or a down payment?

    When buying a car, it may be better to have a down payment rather than a trade in. A trade in offers convenience to the car ... Read Answer >>
  2. How much impact does government regulation have on the automotive sector?

    Learn about how government regulation affects the automotive industry in terms of design, safety features, fuel-economy and ... Read Answer >>
  3. What types of companies are in the automotive sector besides auto manufacturers?

    Explore the relationships between automobile manufacturers and the numerous other types of companies that work in the automotive ... Read Answer >>
Hot Definitions
  1. Restricted Stock Unit

    Compensation offered by an employer to an employee in the form of company stock. The employee does not receive the stock ...
  2. Operating Ratio

    A ratio that shows the efficiency of a company's management by comparing operating expense to net sales. Calculated as:
  3. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  4. Pro Forma

    A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results ...
  5. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center