Cash for Clunkers: Cease is the Word

Faster than Greased Lightening, Cash for Clunkers, took off this summer and won our hearts, at least the part that beats faster after saving up to $4,500 that the rebate program offered new car buyers.

Then, it turned colder - that's where it ends.

Car shoppers have until 8 p.m. (EDT) Monday, Aug. 24 to take advantage of the rebates of $3,500 or $4,500 off the price of a new car in return for older, less fuel-efficient trade-ins that are sent to the scrap heap.

Yes, just like those Summer Nights, this affair seemingly has to wrap up just as we get ready to go back to Rydell High, or wherever you go this fall for work, school, or otherwise.

Originally a $1 billion program known as the Car Allowance Rebate System (CARS), Clunkers got a $3 billion boost in early August after heavy demand nearly depleted its funds in one week. Now the Obama administration is hoping for a smooth ending to a program that has spurred auto sales but created headaches for many auto dealers.

Dealers must submit a 13-page application with proper documentation of the sale in order to get repaid. That has left many dealers with unpaid claims worth hundreds of thousands of dollars.

"It has brought in some traffic that we would not have had, but if you don't get paid, it is all for naught," said Alton Owen Jr., sales manager at Owen Ford in Jarratt, Va. His dealership won't be offering the clunker deals this weekend because it has yet to be repaid for 21 sales.

As of Aug. 20, 457,000 sales worth $1.9 billion had been received. About 40% of those claims have been reviewed, but only $140 million, or about 7% of the claims dealers submitted, have actually been paid. (To help cash-strapped dealers, both Chrysler and General Motors (Stock Quote: GM) said they would provide cash advances to help cover any program-related cash shortfalls.)

It remains unclear whether the Monday deadline will create a new rush of sales this weekend and if dealers will continue to make deals knowing their claims have to be filed in four days.