A compromise was recently reached by the Obama’s administration and the House for a Cash-for-clunkers bill also known as fleet modernization or scrappage bill.

The cash-for-clunkers will provide federal vouchers of up to $4,500 for people to trade in their old cars for new ones that get better mileage.

To easily understand cash-for-clunkers, Auto Shop name website has created bullet points to list the highlights of the program:

• Cash-for-clunkers program is expected to add 1 million new vehicle sales

• The bill is in House committee backed by the president. Senators from both parties are prepared to co-sponsor similar legislation soon.

• It is expected to give the struggling auto industry a sales boost.

• It would replace older vehicles with new ones that use less fuel, are safer and pollute less.

• Environmental lobbyists, might derail the bill. They don’t think it boosts fuel economy enough.

• Opponents say the environmentalists’ fuel-economy improvement thresholds are so high that foreign brands benefit disproportionately, because their lineups tend now to have more small, fuel-efficient vehicles.

• The American Council for an Energy-Efficient Economy complained that the bill proposal as it stands now is way too lenient.

• Car companies, autoworkers, component suppliers and car dealers lobbyists are trying to keep the bill from being derailed.

• Price tag for the program is about $4 billion. The money is currently proposed to come from Energy Department funding included in the already enacted $787 billion economic stimulus package.

• If the bill becomes law, the government would send up to $4,500 to the selling dealer on your behalf.

• Buy a new car, priced at $45,000 or less and rated at least 4 mpg better than the old one (gets a $3,500 voucher). If the new one gets at least 10 mpg better, you get the full $4,500.

• Trade in a car that — this is a key point — has been registered and in use for at least a year, and has a federal combined city/highway fuel-economy rating of 18 or fewer miles per gallon.

• Trucks are more complicated.

• For standard-duty models — most SUVs, vans and pickups:. The old one must be rated 18 mpg or less.

• The new one must be at least 2 mpg better for $3,500 or at least 5 mpg better for $4,500.

• Work trucks (8,500 to 10,000 lbs.) don’t have mpg ratings, so age is the criteria. The old one has to be a 2001 model or older. And only $3,500 is available.

• Yes, one can combine these incentives with other offers: You could trade for a hybrid and get the voucher, claim the hybrid tax credit and get dealer or manufacturer discounts. You also could deduct the sales tax, if any, on your next federal tax return.

• You will NEVER the $3,500 or $4,500. It’s an electronic transfer from the government to the dealer. Dealers want to be sure the amount can be counted as cash from the buyer, which would help buyers get credit because they’re financing less.

• Trade-ins are given to salvage operators. The engine, transmission and some other parts will be destroyed so they can’t be reused.

• You can’t buy a junkyard car for a few hundred bucks and trade it to benefit from the program. There is a one-year-in-service requirement.

• The bill contemplates making the incentives retroactive to March 30.

• As proposed, the program would be in effect for just one year.