Just got off the blower with Rae Tyson, stalwart spokesman for the Department of Transportation’s Cash for Clunkers (a.k.a. C.A.R.S.) program. Although Tyson doesn’t have the exact stats, he revealed that the agency has rejected “significantly more” than 25 percent of dealer submissions for government reimbursement. “The bottleneck is regrettable,” Rae said. “But the number represents safeguards against fraud.” The clock is ticking. As of this morning, US car dealers have submitted paperwork to the C4C program for 390,283 vehicles. That represents $1.63 billion from the $3 billion total. Minus the $50 million processing fee. So there’s $1.34 billion and change left in the kitty. [Top ten reasons for C.A.R.S. rejection after the jump.] Meanwhile, NADA spokesman Chuck Cyrill says, “a lot of dealers are pulling out of the program.” Cyrill contends that cash flow problems caused by paperwork issues are causing dealers to “limit their exposure.” The remedy is the experience. “To address dealer concerns with a backlog of reimbursement claims, DOT has informed NADA that it will commit to deploy an additional 1,000 employees to speed up its processing efforts.”
10. Missing trade-in registration
9. Trade-in not registered to same owner for required 12 months
8. VIN mismatch on summary of sale
7. VIN mismatch on trade-in proof of insurance
6. Missing summary of sale/lease
5. Trade-in VIN mismatch
4. Missing signature on summary of sale
3. No proof of insurance
2. More than three errors in the transaction
1. Failure to brand title “Junk Automobile, CARS.gov.”
I wonder how many of the bounced applications are due to dealer paperwork errors which are easily corrected vs. how many are situations where the traded car really doesn’t qualify and now the dealer is in a tough spot.
C4C certainly gives a lot of rope to a lot of dealers. Not surprising that a number of them are finding creative ways to hang themselves with it.
I’ve seen paperwork in finance departments. Not a pretty picture. This would not surprise me. In the usual day to day operation the policy would be to get the customer into the finance dept. quickly. Most were there for hours already, and sitting alone waiting to sign papers, allows them to start thinking ,and get buyers remorse. A slow moving finance dept. can and does kill deals. So the rule is to straighten the paperwork out later.
The unfortunate part of clunker trades is that most have misplaced titles, errors on titles, missing registrations etc. etc. , and with the volume of business dealers have had over the last month it is no surprise all types of paperwork nightmares are now rearing their ugly heads.
I could see the proof of insurance being an issue because that is something that the car owner has to provide. The dealer is at the mercy of the buyer’s ability to provide the proof. All other items can be checked and controlled by the dealer.
My auto insurance policy renews every 6 months. When the new one shows up, I toss the old paperwork. After all, what good is it?
So if I had to prove my car was insured for the last 12 months, I could not. I suppose I could beg my insurance company to give me something. But I doubt they really want to waste their time digging up expired policies.
I wouldn’t be surprised that some dealers tried to “slip in” cars that wouldn’t qualify for one reason or another while holding the customer to some level of responsibility if the deal didn’t fly with the government.
“I wouldn’t be surprised that some dealers tried to “slip in” cars that wouldn’t qualify for one reason or another while holding the customer to some level of responsibility if the deal didn’t fly with the government.”
I would put money on that has happened many times. My guess is a dealer would try to run some thru just to see if they could get away with it. Then maybe figure they could beat the system and run a lot thru it. I guess guys like me who dont have a clunker will have to wait to buy since all the incentives are off. I’m sure the incentives will come back by the end of October, early November. Those who used the program early got real lucky to get the big rebates plus the $4,500 from the government too.
I’d like to hear the dealers’ side of the story…..from this article I have little sympathy for the dealers as these errors should have been caught by the dealer before any car was delivered..
What’s the market for de-clunkered vehicles with “CLUNKER” written on them in fluorescent green spray paint?
Ken Elias
Ding, Ding !!!
That and buyers playing games with insurance.
People that drive these clunkers are notorious for buying insurance to satisfy registration requirements and canceling immediately after. Then they purchase again when caught but .gov is so slow it takes months. They might be insured 2 or 3 months out of the year if that. The fly by night car insurance outfits at payday loan places in the ghetto live for that, they are more a proof of insurance printing outfit then a insurance company.
25% fraud sounds very low, probably just what they caught.
I’m getting a warm fuzzy feeling inside just thinking about a customer pulling a fast one on the dealer.
But then the dealer probably has a provision where they can unwind a sale if the C4C payment is not received, and I’m sure the customer owes all the depreciation on the car when the dealer unwinds the contract. So that means if someone bought a $20,000 Sebring with C4C money – they’d owe $20,000 and have their car taken away.
Seriously though, I agree with previous comments that VIN mismatches and missing signatures hardly seems like a failure of the C4C system. It’s a sign that dealers are trying to play games. I find it hard to believe that dealers have trouble filling out complex paperwork to satisfy legal requirements. How many documents during the customer/dealer transaction have wrong VIN or missing signatures?
^Agree, fraud like in all government programs is going to be larger then ever admitted to. The simple reason is free, taxpayer money.
I’m confused as to what constitutes “Insurance”. I have a qualified clunker parked, not being driven. My insurance is comprehensive only (for natural disasters) and not sufficient for on-road liability. Michigan has no concept of such a status as far as registration goes so I must keep the tags up to date. Every year the state sends me a renewal form stating “proof of insurance required!” So I call my agent and he momentarily activates my road insurance, sends me proof, and then deactivates it, all for no charge. I’m happy, the state is happy.
So, if I were to try to clunk this car, what’s the official ruling? Do I have it insured or not?
I have little sympathy for the dealers as these errors should have been caught by the dealer before any car was delivered..
Exactly. Ultimately it’s the dealer’s responsibility to make sure all of the “i”s are dotted and “t”s are crossed. If they turn in incomplete paperwork, it’s their own damn fault, and they should be denied their money for it. The same would happen if it were a manufacturer rebate based on a certain condition (college student rebate, for example). If there is no proof that the condition is met, the rebate is not issued to the dealer. A dealership shouldn’t be paid their clunker money just because they want to, they should have to follow the guidelines.
At least they don’t have to send in an empty can of engine killer.
Interestingly, the very first item on the cars.gov site “Things to know” is a this:
“To participate in the CARS program, you do not have to sign an agreement to pay back the dealer the CARS credit amount if the deal is rejected.”
So I would say the dealer is SOL if the deal is rejected.
While I’m sure the paperwork is not ideal, the fact that some dealers are trying to slip in cars that don’t qualify is really no surprise. They probably don’t care that much either as there are plenty of circulating stories of dealers making C$C customers sign a document, making them responsible for the missing cash in case the government cheese doesn’t arrive. The perfect bait and switch.
First: there are a lot of sketchy dealers out there who have burned many a customer with fancy paperwork footwork — so perhaps some of those will get a dose for once.
Second: lots of good dealers out there too, and it’s a shame they’ll get burned by paperwork errors if they can’t get ’em corrected.
Third: how many of these were rejected for paperwork errors that are intentional — where the dealer will now show the customer and say “see, it was rejected, you owe us the $4500 now” because they had the customer sign that piece of paper making them liable…then the dealership will turn around and resubmit the paperwork properly to get the government money too?
Has anyone on TTAC actually purchased a car under the C4C program? It’d be interesting to read the fine-print-BS that dealers lob at customers regarding who is liable to pay C4C cash when the dealer botches paperwork.
Unfortunately I don’t own a car that qualifies for C4C or else I’d be stealing/taking taxpayer money to fund a new whip.
holydonut: “Unfortunately I don’t own a car that qualifies for C4C”
You didn’t really want to suffer through that did you?
Coming Soon!- C4C purchase loan defaults.
Bunter
1. Failure to brand title “Junk Automobile, CARS.gov.”
Does this mean that the car may not have had the engine killed?
I wonder when all this is over and the investigations start into the inherent fraud that will be going on what percentage of cars that should have had the engine killed actually got re sold as used.
An interesting demographic exercise: Cross reference rejected C4C buyers with the make/model of new vehicle they tried to or actually did buy.
‘Has anyone on TTAC actually purchased a car under the C4C program? It’d be interesting to read the fine-print-BS that dealers lob at customers regarding who is liable to pay C4C cash when the dealer botches paperwork.’
I was the first C4C car purchase processed at our local dealership. I signed NO extra paperwork other than the standard retail contract they would normally sign. This retail contract indicated the $4500 C4C discount in the same discount lines as factory incentives etc… A minimal amount of research prior to cashing in a clunker would protect the majority of consumers from any predatory dealer actions.
Also, the dealership was EXTREMELY careful about getting correct copies of my documentation etc… Nor did they allow delivery of the car until funds were approved. Everyone was protected that way.
It wasn’t a big deal to get my insurance agent to fax over 365 days worth of coverage proof. However, when the dealer pointed out that my registration cab card was from May of 09 to May of 2010, and therefore would need the previous cab card from 08 to 09, I thought I was screwed! Who would keep their old registration cards? I wasn’t too positive about the MN DOT being as responsive as my insurance agent at the fax machine… Amazingly I found the old card stuffed in the glove box. I guess there can be an upside to rarely cleaning out the glovebox.
Local Subaru dealer claims to have 50 C4C clunkers lined up waiting for the owners to deliver the title. C4C sales are currently limited to only those buyers who can produce proper title and insurance proof at signing.
On doing so, that Forrester is yours at MSRP less C4C credit. Don’t want the deal? The door is over there.
We’ve had a number of customers try to screw us on C4C deals thus far. A couple have said they had insurance for a full year but didn’t, one tried to trade in a vehicle that wasn’t in his name, and a couple have tried to come back and get a different salesperson after being told by the first that their vehicle didn’t qualify.
The local Toyota and Nissan dealerships are also offering to tow in clunkers at their own expense, which is a clear violation as according to the rules the vehicles have to be running, but I suppose there is no way for the government to check that unless they demand video proof of the cars being destroyed.
We have stayed clear of most of the headaches through being careful about paperwork – driving out with customers to retrieve titles and registrations, or taking them to the tax collectors office so that they can have new ones made up if the originals are lost. Insurance companies are overall being very easy to work with, most have a form letter already prepared so we just need to call them and they fax over a document showing continuous insurance with no gaps over the past year.
We do have a document that customers sign which basically states that all of the information they have provided us is truthful, and that if for some reason their voucher is rejected that they will have the option of returning the vehicle for their clunker with no penalties, or paying the amount of the voucher and keeping the new car. So far no one has had a problem with that.
Only $4500 off true sticker price for a forrester? That aint a good deal. Must be alot of pissed off lesbians up your way.
Can I just ask why a perfectly decent 93 ES is being junked? WTF!
All those items listed should be easy to correct. Actually, people should be grateful that the government is at least trying to keep the program honest. Without question there are people who will try to get one over on the dealer, and certainly the dealer will try their best to get one over on the government and the consumer. I’d rather they err on the side of being too cautious. Sure there is some added cost burden to the dealer, but that is no doubt being made up by the dealer giving piss poor deals on C4C trades.
HELP! I purchased a car under the C4C program, they took my old car and i drove away with the new car. And now, ten days later, they want the new car back (or $4500) because there was a gap in my insurance. I signed NO extra paperwork stating that i would reimburse them if the C4C rebate was rejected. Do I have to give the car back or pay the $4500? The insurance documentation I provided were legit. I had 2 policies in the last year with a month’s gap between the two. The dealer did require that I give them the old insurance card. So they did have all the infomation, before they sold me the card. I genuinely forgot about the gap in my insurance, but I did provide them with both insurance cards. I’m assuming they looked at the dates and sold me the car anyway?
Dosydos, you need to talk to a lawyer. Fast.
krhodes1: ” ‘To participate in the CARS program, you do not have to sign an agreement to pay back the dealer the CARS credit amount if the deal is rejected.’ So I would say the dealer is SOL if the deal is rejected.”
Well, I’m not a lawyer, but I doubt the customer is entitled to perpetrate a fraud on the dealer. So if phony documents (see NulloModo’s comment) are submitted to the dealer, the customer might well be on the hook.
bolhuijo: “So I call my agent and he momentarily activates my road insurance, sends me proof, and then deactivates it, all for no charge. I’m happy, the state is happy.”
I’m pretty sure neither the insurance company the agent represents nor the State’s insurance regulatory entity would be happy if they knew what he’s doing. Instead of playing games, you should either drop the car’s annual registration (you don’t plan to drive it, right?) or buy “collector car” coverage intended for cars driven only occasionally. On a true clunker (worth less than $4,500) such coverage would be very cheap.
“To address dealer concerns with a backlog of reimbursement claims, DOT has informed NADA that it will commit to deploy an additional 1,000 employees to speed up its processing efforts.”
Ye gods, an additional thousand employees! How many (or should I say, how few) claims does an employee process per day? Not enough, apparently.
So it’s costing ~$128/clunker to administer via this programme? ($50m/~310k vehicles – check my math, I’m half asleep).
Some of the “B&B” might like to apologise; we’ve seen posts along the lines of “$4,500 trade plus $20,000 gumnit overhead”.
Those posters know who they are….
@dosydos
The bottom line is you did not qualify. It may be better to take the high road and return the car.
A lawyer will want $2500 to investigate. He or she will ask “Did the salesperson ask you if you had insurance LAST year or FOR a year? What did your proof show? Last year or for the full year?
Every little piece will be looked at under a microscope with the salesperson covering his or her ass several times over. On a he said-she said deal, you will loose.
You can choose to unwind the deal straight across or have it unwound with a $2500 hole in your wallet.
Counter with paying half of loss of the clunker discount. The dealer with take the other half out of the salesperson’s ass.
This program steal future sales.
Wait until sales plunge again. This program is already waning in effectiveness.
Dealers better may hay while the sun is shining and “bale” while they can.
@dosydos
The dealer screwed up by not checking your paperwork properly. Did they register your new car? If so, they just gave you a $4500 trade in value on your clunker. Somebody is getting fired.
From the CARS website:
Q. A dealer has demanded that I sign an agreement that requires me to pay the dealer if the credit application is rejected because I submit incorrect information regarding my name, residence address, driver’s license number, or the title to my trade-in car. Am I required to agree to this?
NO. However, be aware that to participate in the CARS program you must certify under penalty of law that all information you provide is true. If your CARS program credit is denied because of a false statement made by you, the dealer may take action to recover the money or vehicle regardless of whether you sign such an agreement.
They may try to sue you for providing “false” information, but if you provided 2 legit insurance cards with a gap in between and they missed it, they are on shaky grounds.
At my dealership, we are requiring that the customers specifically certify that they can provide proper paperwork to get the approval or the deal is off, that they are not trying to also buy another car using CARS, and that if the deal is ultimately rejected by the gov’t that the buyer will assist in providing any additional paperwork or cough up the money. Everyone has signed no problem. Also, we are not destroying any car until we get paid for it. So far we have been paid for exactly 1 of the 65 clunkers we have taken in over the last 3 weeks.
We are also charging full sticker for Accents, Elantras and 4 cylinder Sonatas.
As for additional 1000?! employees the DOT is planning on helping out with this, what jobs are they doing that are so unimportant they can drop what they are doing and help out with this? Talk about government waste!
dosydos, if what you’re saying is true then the dealer has no leg to stand on.
I had a dealer today tell me that he rejected a vehicle for C4C because it had not been insured for three days. He knows the fine print and every dealer who benefits from this program has the same access to this information.
If the dealer was given information from you, and that information was truthful, they have absolutely no recourse. End of story.
Steven – There are a couple potential holdups in dosydo’s situation.
First of all, there is a packet of paperwork that I believe is from the CARS.gov people that gets signed by the customer in every CARS deal. I’m fairly certain that somewhere in that there is a statement that you are agreeing that your vehicle was continually insured for the past full year. Now, whether or not dosydo remembered the gap or not is immaterial, ignorance has never been a legitimate defense.
Second, depending on how the dealer drew up the paperwork, whether the car was financed or not, and whether or not a bank actually bought the loan, the deal might not even be final.
NulloModo – There is no extra packet of paperwork from CARS.gov that I signed. The only mention of CARS is in the sales contract listed as a line item in the Total Downpayment section. BTW, They’ve already cashed my downpayment check.
@Steven Lang
so if the dealership hasn’t registered my new car yet, can they withhold that in an effort to get me to reimburse them?
Could this stupid ‘Cash for Clunkers’ program be any more f**ked up?
Just kill it, already.
The only people who actually like this program are dealerships who get a temporary free rape pass (over admittedly idiotic consumers, who are paying MSRP for cars that were selling for 15% to 25% off MSRP just a few months ago).
Manufacturers and dealers will resume the hood on the cash piling on when the CFC program ends.
Until then, no person with a brain should step foot on a dealership lot.
Of course, all the people who sell new cars or depend on the sale of new cars will tell a different tale (i.e. This program is great for the consumer!).
ohsnapback: “…consumers, who are paying MSRP for cars that were selling for 15% to 25% off MSRP just a few months ago).
Manufacturers and dealers will resume the hood on the cash piling on when the CFC program ends.”
I hope so. The early birds got some terrific deals, such as $3,500 or $4,500 government subsidies on a near-worthless clunker PLUS $3,000 or so factory incentives on ’09 models (such as Sonatas and Fusions). Now, the sensible ’09 models are sold out, factory incentives on 2010’s are modest if anything, and dealers are selling at full sticker. Some CARS customers are getting new rides for about the same net cost they would have paid pre-CARS.
““To address dealer concerns with a backlog of reimbursement claims, DOT has informed NADA that it will commit to deploy an additional 1,000 employees to speed up its processing efforts.”
Ye gods, an additional thousand employees! How many (or should I say, how few) claims does an employee process per day? Not enough, apparently.”
Next question: what were those thousand employees doing before getting deployed to push c4c paper? What other ongoing DOT programs will now fall by the wayside for lack of paper pushers? Come to think of it, some of those DOT programs are probably giving federal gasoline tax money to pay for urban transit systems. Hmmm, maybe this is a good thing…?