The New York Times this week quoted an anonymous White House aide conceding that the program is one “in which you trade old clunkers for new clunkers.†Dealerships are reporting sales of Cadillac SRXs and Hummer H3Ts. And even Transportation Secretary Ray LaHood has said that, given the chance, he’d use the program to scoop up a Ford Explorer SUV, the 4WD version of which gets just 15 miles per gallon."
Last paragraph on page 33 of the regulation:
In addition to the definitional categories, the new vehicle purchased or leased
under the program must achieve a minimum combined fuel economy level. For new
passenger automobiles the combined fuel economy must be at least 22 miles per gallon,
for category 1 trucks it must be at least 18 miles per gallon, and for category 2 trucks it
must be at least 15 miles per gallon. Category 3 trucks have no minimum fuel economy
requirement.
It goes on to define how "combined fuel economy" is calculated. So what are those categories of trucks?
“category 1 truck†means a
non-passenger automobile, as defined in section 32901(a)(17) of title 49, United States Code, that has a
combined fuel economy value of at least 18 miles per gallon, except that such term does not include a
category 2 truck; “category 2 truck†means a large van or a large pickup, as categorized by the Secretary
using the method used by the Environmental Protection Agency and described in the report entitled “Light-
Duty Automotive Technology and Fuel Economy Trends: 1975 through 2008â€; “category 3 truck†means a
work truck, as defined in section 32901(a)(19) of title 49, United States Code. Under regulations
implementing the CAFE program (see 49 CFR Part 523), “passenger automobiles†currently include all
passenger cars and “non-passenger automobiles†include all SUVs, vans and pickup trucks up to 8,500
pounds GVWR.
So, yes, if what you owned was a category 2 truck, you could indeed trade it in for a vehicle that got as little as 15 mpg. Since a category 2 truck would be a full size van or full size pickup, 15 mpg could be an improvement. Also, the amount of rebate given was based on a calculation that compared the combined fuel mileage of the 2 vehicles. So if it wasn't an improvement, you wouldn't get anything anyway. Unfortunately for category 2 trucks, any improvement was enough to qualify.
The regulations (should you care to read them):
http://www.cars.gov/files/official-information/rule.pdf (Just to warn you - it's quite lengthy.)
If you want to play with different car choices and see how much of rebate someone could have gotten:
http://www.fueleconomy.gov/feg/CarsSearchIntro.shtml Click on the "I'm ready to begin!" button and pick various car choices. It's interesting to see just how low the bar was set for category 2 trucks. (Yes, you could trade a 2000 Ford F-150 V8 in for a Hummer H3 3.7L V6. The H3 gets 2 mpg better than the F-150. The H2 didn't qualify. The minimum mpg was set to 15 for the new vehicle for category 2 trucks.)
Personally, I agreed with the philosophy behind the program, but not the implementation. The bar was set way too low in terms of the required amount of improvement in MPG. I thought it should have required at least a 10 mpg improvement to qualify for any funds at all regardless of category and a 15 mpg improvement to qualify for full funds, but of course that wouldn't fly because it would have largely excluded US car companies except for the relatively low number of trade-ins that got 15 mpg or less. I also don't think it should have excluded cars older than 25 years.
Who funded the loans? Banks, credit unions, and S&Ls did, the same as for any other car purchase that requires a loan.