Cash for Clunkers

Cash for Clunkers, also known as the Car Allowance Rebate System (CARS) was an incentive program to provide vouchers, worth between $3,500 and $4,500, to people who traded in less fuel-efficient vehicles for new, more efficient vehicles. Consumers were able to combine vouchers with manufacturers' incentives and rebates. Also called the Consumer Assistance to Recycle and Save (CARS) Act, the program ended on August 24, 2009.[1] Other countries have followed suit: first Canada[2] and now Japan.[3] Now, on the heels of the program's popularity are similar programs that are intended to stimulate consumer spending. While many of these programs are intended to promote energy efficiency, others simply provide cash incentives to help consumers out of financial difficulty. Consequently, Cash for Clunkers is gaining currency as a term for any program that offers financial incentives to consumers.

Cash for Appliances encourages consumers to scrap their inefficient large appliances for new air conditioners, dishwashers, freezers and refrigerators, and washers and dryers. [4] Some utilities who participate in the Responsible Appliance Disposal (RAD) Program may be able to offer cash for your old appliances.

PROPOSALS: HOMESTAR, or Cash for Caulkers, is a program that is intended to offer rebates to consumers for retrofitted improvements to their homes.

Cash for Keys offers relocation assistance to homeowners who keep their homes intact before moving out.

Also, the $6,500.00 tax credit, for repeat homebuyers, and $8,000.00 tax credit, for first-time homebuyers, have been been extended to April 30, 2010, for purchases of principal residences.[5]

As part of the American Reinvestment and Recovery Act (ARRA), a stimulus bill passed in February, Cash for Appliances has set aside $300 million to encourage consumers to purchase large appliances with the help of rebates. The DOE has set a deadline of October 15 for each state and territory to file a formal application to participate in the program, which would provide rebates of between $50 and $200 for appliances that feature the ENERGY STAR rating. However, unlike Cash for Clunkers, consumers are not required to trade in their old appliances.[1]

Each state or territory will receive an allocation proportionate to its population, with Califorinia receiving the greatest allocation and the Virgin Islands receiving the least.[2] Moreover, each state will be able to establish its own rules for distributing the money. [3]

More details about the program may be found on the ENERGY STAR page.

HOMESTAR, or Cash for Caulkers, is a program that is intended to offer rebates to consumers for retrofitted improvements to their homes. Silver rebates, from $1,000 to $1,500, would be available for simple upgrades. Gold rebates, of up to $3,000, would be available for whole-home energy audits and subsequent retrofits that achieve at least a 20% energy savings (The White House). However, $8,000 rebates would be available to consumers who conduct energy audits and install technology that dramatically increases energy efficiency (Salt Lake Tribune). As of May 6, 2010, the program had passed in the House by a 246-161 vote (CBS News).

Cash for Keys is an alternate name for Relocation Assistance programs that lenders already use to encourage foreclosed homeowners to maintain their homes before moving out. According to one source, homeowners who speak to lenders may receive as much as $5,000 each to leave a home within 30 days of approval (CBS I-Team).

The federal Making Home Affordable program expands Cash for Keys by offering $1,000 incentives to lenders and $1,500 incentives to homeowners to find alternatives to foreclosure. While Making Home Affordable was created to assist with loan modifications on primary residences with balances no greater than $729, 750, many homeowners find themselves in foreclosure, despite this assistance, due to financial situations that are inadequate to meet the new terms.

Avoiding foreclosure is preferable for both homeowners and lenders. However, there are two alternatives to foreclosure that Cash for Keys hopes to promote. The short sale encourages a lender to accept a payoff that is less than that owed and to forgive the remaining debt. A deed in lieu of foreclosure encourages the lender to take back the deed to the house in exchange for debt forgiveness. The program will give lenders up to $1,000 for every completed short sale or deed-in-lieu and will give $1,500 to homeowners for relocation assistance (CNN Money).

Created by the Worker, Homeownership, and Business-Assistance Act of $2009, the homebuyer program offers two tax credits, which have been extended into 2010.

The $6,500.00 tax credit for repeat homebuyers has been extended to April 30, 2010. Principal residences must be purchased between November 30, 2009, and April 30, 2010. [1] More details about the repeat-homebuyer tax credit may be found here.

The $8,000.00 tax credit for first-time homebuyers has also been extended to April 30, 2010. Principal residences must be purchased between January 1 and April 30, 2010.[2] More details about the first-time-homebuyer tax credit may be found here.

To be eligible for either credit, consumers must either amend their 2008 returns or wait to file their 2009 returns. Consumers should be prepared for a 12- to 16-week wait, due to the backlog of amended returns at the IRS.[3]

The Environmental Protection Agency (EPA) launched a little known program in 2006 to encourage consumers to recycle their unwanted large appliances. The Responsible Appliance-Disposal (RAD) Program works with city governments, manufacturers, retailers, and utility companies. Check to see if your local utility company is a RAD partner that will provide cash rebates for the disposal of old appliances.

Currently, Sears is the only RAD retail partner (EPA).