If you meet the requirements, the government will give you a $3,500 or $4,500 voucher, depending on the new car you buy. You'll get a $3,500 rebate if the car you're buying gets 4 to 10 miles per gallon more than the one you trade in. You'll get $4,500 if the new car's mileage beats the old car's by more than 10 mpg.
Basically, the new car must get at least 22 combined miles per gallon to get a voucher. (Trucks have a lower standard and may qualify for the program even when there isn't a big mileage savings.)
Look up the car you want at fueleconomy.gov and do the math.
For example, if you're trading in a 1994 Chevrolet Suburban, which has a combined city/highway mileage of 13, for an Equinox, which gets 20 miles to the gallon, you'd get $3,500. (You couldn't use the program to trade in the Suburban for a Tahoe, Trailblazer or Avalanche because the fuel efficiency on those new cars isn't high enough to qualify.)
If you've grown out of sport-utility vehicles and want a smaller car, buying the 30-mpg Aveo will land you a $4,500 voucher.
It's worth mentioning that the size of the rebate is pivotal because you won't get much more than that for the car. Vehicles turned in under the program will be junked, so there's no reason the dealer where you trade it in would pay for more than the scrap value, which can be as little as a few hundred dollars.
Is your car worth more than voucher?
Does the voucher give you the best deal for your trade-in? One way to figure that out is to go to the Kelley Blue Book website at www.kbb.com and look up estimates of what your car would be worth if you traded it in outside of the "cash for clunkers" program or sold it to a private party.
The 1994 Suburban could be sold for $3,880 to $4,955, depending on its condition, according to the site. And you might get more if it were loaded with options.
But if you plan on buying a new SUV that gets only 22 miles to the gallon, your voucher is worth considerably less than the used-car value -- unless the old Chevy is in such bad condition that you'd get bottom-rung pricing.
On the other hand, if you're buying the Aveo, the voucher is probably a good bet since it provides almost as much as you could get in a private-party sale (more than you'd get from a dealer) and you wouldn't have to pay for advertising or go through the trouble of showing the car.
Theoretically, you could turn in your 2002 Acura MDX, with a combined city/highway mileage of 17, under the voucher program. But you'd be crazy to because the car would sell for about $10,000 -- which is $5,500 more than you would get through the voucher program.
The perfect "cash for clunkers" trade-in: a 1994 Oldsmobile Cutlass Supreme, which Kelley Blue Book estimates is worth $700 to $2,130, depending on the car's condition. The voucher would give you at least $1,400 more.
Do research on your new car and its price
If all this still leaves you wanting to participate in "cash for clunkers," your final step would be to do your homework on the new car you want to buy.
Make sure to consider the options you want and do plenty of comparison shopping to make sure you get the best deal.