Government Tells ‘Clunkers’ Buyers Not To Sign Waiver

Aug. 13 (Bloomberg) -- The U.S. Department of Transportation is advising consumers taking advantage of the “Cash for Clunkers” program not to sign contingency agreements promising to pay back up to $4,500 if dealers don’t receive payment from the government.

No contingency agreement is required to participate, the Transportation Department, which administers the $3 billion Car Allowance Rebate System, said on its Web site.

The Minnesota Automobile Dealers Association has a form on its Web site that members can use as part of a new-car closing. By signing the form, the buyer agrees to reimburse the dealership the incentive amount if the dealer is unable to obtain the credit from the government “for any reason.” The consumer can also return the car to the dealership and pay “a reasonable charge” for use of the new vehicle, according to the form.

Consumers signing the agreement also acknowledge their trade-in vehicle may have been destroyed and can’t be returned.

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