Saturday, December 27, 2014

Understanding Incentives and Rebates

In the automotive world, current offers or special offers are defined as manufacturer incentives and rebates offered on specific makes and models as a way of enticing consumers to buy certain cars.

Manufacturer-to-consumer current offers (or incentives and rebates) vary from manufacturer to manufacturer, from vehicle to vehicle and they often change from month to month, depending on the particular offer. Consumer incentives are applied to specific models for a specified period of time and they are usually offered in the form of low interest (or no interest) car loans or cash rebates.

Sometimes, a manufacturer will offer combination deals where you can choose both a low interest rate incentive AND a cash rebate, but the interest would be higher and the cash rebate would be lower than if you chose one offer separately. Whats more, certain manufacturers will allow a consumer to terminate his or her vehicle lease early, without penalty, if the customer enters into a new lease, or purchases a new car, from that same manufacturer. Still more, certain manufacturers offer special lease deals with extremely low monthly payments, no cash down and no up-front charges.

There are also manufacturer to dealer incentives or cash incentives paid to the dealer by the manufacturer when a particular vehicle is sold. Sometimes, dealers will pass along these incentives or cash allowances to consumers to make the sales deal more attractive for the customer. Other times, these incentives are non-negotiable. Be sure to research our Negotiating Strategies section to learn more about manufacturer-to-dealer incentives. In each case, the manufacturer is the primary source of the incentive not the dealer and each offer is designed to spur sales of certain vehicles in the marketplace.

As an overview, following are some common manufacturer incentives:

1. Reduced finance rates
2. Cash back on certain models
3. Loyalty bonus
4. Graduate or military incentives