How we got paid $1,500 for a car we were going to scrap

When our van finally got to the point where it was no longer worth fixing, we thought we would have to scrap it.  After looking at the options for selling a vehicle beyond repair to a salvage lot, the payout was embarrassing!  I could have sold one tire and made more than what they wanted to pay me for the whole car!

Imagine my excitement when I found out that we qualify for a program that will give us $1,500 instead of $50.  If a friend hadn’t tipped me off to the idea, I would have missed out on $1,450!  That’s more than pocket change!

Many people are leaving money on the table just because they don’t know they can still get cash for their clunker with vehicle retirement programs.  I’m excited to give you the details so that you can walk away with more money for your very used car.

Our Story

If you’ve been reading here for a while you’ve heard about our car drama.  Because we’re totally focused on paying off six figures of student loan debt in a hurry, we’re sliding by with vehicles that are less-than-stellar, you might say.  Any bells and whistles they had when they were manufactured (ahem… nearly twenty years ago) have morphed into quirks.  We call it personality.  They are safe and generally reliable, but they require maintenance pretty frequently.

We always plan to drive our vehicles into the ground and are happy to be their final owners.  That means we have to figure out what to do with our vehicles when it’s time to lay them to rest.  If you’re higher up on the vehicle food chain, you probably haven’t had to deal with this issue.

The Problem

We loved our purple van and had a hard time parting with it.  The hardest part was that the van was working fine.  Of course it had plenty of quirks, but in our four years of ownership we were well accustomed to them.

The problem was that the van wouldn’t pass its smog test.  Apparently, there was a transmission issue on the horizon that was causing it to fail the high standards of California’s emissions test, although it wasn’t manifesting itself in usability yet.

California has strict regulations when it comes to smog certification.  A new smog certification is required every two years in order to renew your vehicle’s registration.  In addition, the title cannot be transferred unless the vehicle passed smog within 90 days of the sale or transfer.

Though our car was working fine, we could not sell it or keep it (at least with legal registration).  After continuing to drive it locally with expired plates while we hunted for another one (which was a lemon) and then another one, we were more than thrilled to be able to “retire” our vehicle and get paid well for it!

History

Though the current program and its predecessor are quite different, it’s good to know the history as some terms are used interchangeably and can confuse the uninitiated.

You might remember the federal Car Allowance Rebate System (CARS) program that appeared and disappeared all in the summer of 2009, but you probably know it as by its cute nickname, “Cash for Clunkers.”  The demand was huge, but limited funding allowed the program to last less than two months.  The main goal was to get vehicles with low fuel efficiency off the road.  Vehicles with an average rating of 18 mpg or less qualified.

The Cash for Clunkers program allowed consumers to trade in their low fuel efficiency vehicle for a $3,500-$4,500 rebate on a new vehicle with an average rating of 22 mpg.  Vehicles that were traded in were scrapped in a way that the engines were completely unusable.

Vehicle Retirement

Though it’s still often referred to as “Cash for Clunkers,” the current programs are quite different.  First, they are run on a state, rather than national, level.  I’ll focus on California’s program since that’s what we used.  Second, instead of a rebate on a new car, the California’s program gives you a check with no strings attached.  Additionally, the requirements are very different.  Instead of a matter of fuel efficiency, the smog test is used as a gate-keeper (though you still may be able to retire your vehicle even if you pass smog).

California’s Bureau of Automotive Repair (BAR) administers the Consumer Assistance Program (CAP) which offers the Vehicle Retirement Program.  There are currently two slightly different options.  For more details on California’s vehicle retirement program, go here.

Here’s a summary of the qualifications for Option 1:

To qualify, your vehicle has to fail the smog test.  The failure doesn’t count if it fails just for an ignition timing adjustment, a failed gas cap functional test, or a tampered emissions control system.

The vehicle must not be registered to a fleet, buisness, or non-profit.

The vehicle must be registered in California (not undergoing an initial registration, re-registration, or transfer of ownership) with valid, unexpired stickers OR have all DMV fees paid and not have a registration expired more than 120 days.

The first time we submitted our application it was rejected because we hadn’t paid the registration fees.  We didn’t realize we could pay the registration fees even though it had failed smog.  So although we weren’t registering the van, we paid the registration fee including late fees and resubmitted our application.  We were racing the clock to get it all in before the registration had been expired for 120 days.

The vehicle must have been registered in California for the previous two consecutive years without a lapse in registration.

You can retire one vehicle as the sole owner or 2 vehicles as joint owner within a 12 month period.

If your vehicle qualifies for the program, there are some vehicle equipment and operational requirements that you must pass.  Honestly, they are pretty laughable.  You must have all the doors, hood lid, dashboard, windshield, driver’s seat, side/quarter panels, exhaust system, at least one side window glass, at least one bumper, and at least one headlight, tail light, and brake light. Additionally the car must start on its own, have operational pedals and drive at least 10 yards under its own power.

Our purple van was luxurious compared to those minimal standards.

The standard payment is $1,000 per retired vehicle, but if you fall into a low income category you will get $1,500.

The differences with Option 2:

Most of the requirements are the same as above, but option 2 is just available for households considered low income.

It doesn’t matter if the vehicle fails or passes the smog test.

If the vehicle has not been registered in California for two consecutive years, it may still be eligible if you can prove that it has been primarily driven in California for the last two years.  You can do that by showing two years of continuous car insurance coverage OR auto repair receipts from each of the past two calendar years (see more details here).

What is considered low income?

You are considered low income if you make less than 225% of the poverty level.  If you qualify, you will need to provide documentation.  We included a copy of our most recent tax return when we submitted our application.

You can check the chart below to see if you qualify for low income vehicle retirement ($1,500).  If your income is at or below the income listed for your family size, you qualify as low income.

What about other states?

I’m not familiar with vehicle buyback programs in other states.  From what I can tell, California has the strictest standards regarding emissions, so the vehicle retirement program is the consolation prize that goes along with the strict standards.

Take a look at your state government’s automotive page (or search the name of you state’s emissions test) to see if your state offers any help to pay for repairs or will buy back cars that don’t meet the standards.  I would love to hear what you find or know about your own state’s programs!

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