The CARS/ “Cash for Clunkers”/ “Car Allowance Rebate System” (officially called the “Consumer Assistance Recycle and Save Act of 2009″) program offers a rebate of up to US$4500 for consumers purchasing a new car who also give up their current vehicle getting less than 18mpg. The base rebate is $3500, if the new car gets at least 22mpg and costs $45K or less. If there’s a larger increase in mpg between old and new car, the rebate could be as high as $4500.

Dealers will receive rebates directly, after providing proof that a vehicle has been permanently disabled (i.e., crushed or shredded). Note that there are only about a 1/4 million vouchers at present, totalling over $1B in rebates. Qualifications vary based on whether you are purchasing a passenger car, truck or SUV. Check with your car dealer for details, but ask ‘qualification’ questions before you start signing paperwork.