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News and Updates ::8 days ago

June 30, 2009

We advise all of our members to consult the C.A.R.S.’s website, www.CARS.gov, on a regular basis for the most up-to-date information on this program. This is the ONLY official website for Cash for Clunkers.

When does the CARS program begin; how will NHTSA handle trade-ins that are made between July 1 and the issuance of the final rule?

While the CARS Act makes transactions on and after July 1 potentially eligible for credits under the CARS program, interested dealers and consumers may want to wait until all of the detailed issues that must be addressed in the implementing regulations are resolved and the final rule is issued. Issuance will occur around July 23. At that point, NHTSA will have in place detailed provisions about establishing eligibility and a system to ensure the prompt payment of money for credits used under the CARS program.

If dealer choose to structure a transaction before the final rule is issued, they will bear the risks associated with later demonstrating that the transaction meets all of the specifications of the final rule. The dealers should also give the credit to the consumer at the time of such transaction. The dealer would be reimbursed by NHTSA later if the dealer registers and submits documentation sufficient to demonstrate that the transaction was an eligible one, that the traded-in vehicle was properly disposed of, and that all requirements in the final rule were met.

Visit the www.CARS.gov website for the latest information.

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H.R. 2743, the “Automobile Dealer Rights Restoration Act,” would restore dealers’ rights under state automotive franchise laws. “The weakening of state automotive franchise laws under an automaker bankruptcy filing affects the rights of every dealer,” said NADA Chairman John McEleney. “And that’s why we strongly support the Dealer Rights Restoration Act.”

NADA’s legislative office is urging all dealers to contact their representatives and ask them to co-sponsor H.R. 2743. House members can be reached through the Capitol switchboard at (202) 225-3121. Click here for the current list of co-sponsors.

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SBA Loan Information
The U.S. Small Business Administration has launched a pilot program that allows dealers to borrow against retail inventory and acts as a revolving line of credit for a dealer to obtain financing for retail goods. The dealer repays the debt as the inventory is sold and can borrow against the line of credit to add new inventory.

Starting on July 1, 2009, through the Dealer Floor Plan, SBA will offer government-guaranteed loans to finance inventory for eligible auto, recreational vehicle, boat, manufactured home and other dealerships.
View a FAQ for borrowers and lenders on Dealer Floor Plan Financing and the SBA program

For assistance and more information on SBA’s (7a) guarantee program, a dealership may:

1. Contact lenders it already does business with. Local and regional banks and credit unions often do 7(a) loans. You may wish to have its principal lender contact talk to the SBA loan expert (if any) and, if seeking floor plan, the floor plan expert (if any).
2. Contact the 7(a) loan expert at the SBA district office in Florida. These SBA employees often have firsthand knowledge of which lenders are actually making 7(a) guaranteed loans in the state.
3. For general information, contact state and local lender associations or the National Association to Guaranteed Government Lenders (NAGGL)
4. The SBA 7(a) has made available a preferred lender list, but realize that it is no panacea. Whether any particular lender presently is in the game is largely a function of its capital liquidity, its cost-of-funds, and its risk tolerance. Even with little back end risk, lenders need to have the $ available to lend at a decent profit.