While retailers like Walmart or Costco may offer coupons, car manufacturers and dealerships tend to provide discounts via rebates and incentives. Car rebates and incentives are programs that stimulate sales for car manufacturers by passing some savings to buyers, in effect lowering your drive-away price. If you’re not sure how to use rebates and incentives when negotiating the best car deals, here are some pointers you should consider.
What are Rebates and Incentives?
There are two main types of new car rebates and incentives you will encounter when searching for the best car deal: cash rebates and low-interest financing.
A rebate is a reduction in cost that is directly refunded to you by the car manufacturer a certain period after the purchase. Usually, a rebate is only offered to buyers who pay cash for their new cars or have their own financing. The great thing about rebates is that everyone is eligible for them – there are normally no restrictions in place. As long as you can pay for your new car, you will receive a rebate. Keep in mind that some extra paperwork may be involved in order for the rebate to go through successfully.
An incentive is typically a low finance interest rate, offered to you by the manufacturer’s financing division when you are in the midst of negotiations while buying a new car. Car dealers get incentives from the manufacturer to help boost sales during a slower season or to get rid of inventory on an unpopular car. These are offered directly to dealers, generally on a regional basis. Note that dealers are not obligated to advertise these incentives to the public. Generally, the rebate amounts range from a few hundred to several thousand dollars.
What Types of Incentives are Out There?
Typically, the incentive offered is a low interest rate. However, be aware that the incentive interest rates are subject to a credit check, meaning that not everyone is necessarily eligible to receive the same rates. If you have poor to mediocre credit, then you won’t be eligible for the lowest interest rates. In these cases, you might be better off shopping for a loan somewhere else.
Knowing that car manufacturers leverage dealer incentives as a means to boost sales, it becomes evident that manufacturers with slow sales tend to offer the best incentives to consumers. So, if you are on the lookout for the best new car deal and you had your eyes on a car such as the 2014 Honda Civic, which may be having a good sales month or year, you can shop around the competitors if they’re in a bit of a sales slump. Chances are they will offer you a better discount or incentive as they need the business more.
How Should I Research Current Incentives and Rebates Offered?
Educating yourself on what incentives are available is highly recommended before visiting a car dealership. If you know what incentives are being provided to the dealer behind the scenes, you can use that as a negotiation angle to get a much better deal for your new car, so arm yourself with as much information as you can. You can find information on new car incentives on dealership and manufacturer websites, as well as in newspaper, radio and TV ads. You can also use a free dealer cost report from Unhaggle.
When looking for the latest information on incentives and rebates, the best source is directly from the car dealership or manufacturer websites. Note that not all manufacturers offer incentives throughout the year, so keep checking back if you are not in a rush. Most often rebates and incentives are used to sell cars that aren’t in high demand.
While new car rebates and incentives are great, you still need to be an educated buyer and do your research. Before you head into the dealership, understand what rebates and incentives are available to you. It’s also good to know what a good drive-away price for the car you’re looking at truly is, so have that number in mind if you haven’t calculated it already. Then, all you have to do is drive off the lot in your new car with a fat smile on your face.
