If you have been considering a new car purchase but fear doing so during this economic downturn, the recent Cash For Clunkers Program may be just the push you need. If you qualify, the new "Cash For Clunkers" legislation provides a tax-free discount on the purchase of either $3,500 or $4,500 depending on the difference in miles per gallon ("mpg") savings and the type of vehicle traded in and purchased.

Here's an overview:

Passenger Vehicles:
Passenger vehicles (beginning with 1984 model years) with a rating of 18 mpgs or less, that are traded in for new passenger vehicles with a rating of 22 mpgs or more are entitled to a $3,500 discount. If the difference in mpgs is 10 mpgs or more, the discount increases to $4,500.

SUV/Light Trucks/Vans:
SUV/light trucks/vans (beginning with 1984 model years) with a rating of 16 mpgs or less, that are traded in for new SUV/light truck with a rating of 18 mpgs or more are entitled to a $3,500 discount. If the difference in mpgs is 5 mpgs or more, the discount increases to $4,500.

Large Light Duty Trucks:
Large light duty trucks (beginning with 1984 model years) with a rating of 14 mpgs or less, that are traded in for new large light duty truck with a rating of 15 mpgs or more are entitled to a $3,500 discount. If the difference in mpgs is 2 mpgs or more, the discount increases to $4,500.

Commercial Trucks:
A commercial truck with a 2001 or older model year, traded in for a new commercial truck is entitled to a $3,500 discount.

The discount is taken right off the price of the new vehicle and the dealers are required to scrap the older vehicles. You can qualify for the discount if you lease a qualified vehicle for a period of at least five years.