The world of new car factory rebates and incentives can seem daunting when shopping for a new car. There are many different types and they can change frequently, so even if you understand them it can still be hard to keep up. CarPro Show Host, automotive expert and former dealership owner Jerry Reynolds has the inside scoop on incentives and rebates. He says they change so frequently that even dealers themselves have a hard time keeping track (and that their goal is to get you, the buyer, as many factory rebates as possible.)
As Reynolds explains in detail, factory rebates are designed to help dealers sell cars so dealerships can reorder more vehicles from the factory. You'll find a lot of factory offers around holidays, at model year changeover and then at the end of the year. But you can find rebates year-round. Some revolve around slow-selling models. Some are advertised, others are not.
Rebates vs Incentives:
There are factory-to-dealer rebates and incentives and factory-to-consumer rebates and incentives, and the latter are the ones we'll define here. (Factory-to-Dealer incentives are not necessarily incentives passed on to the customer.)
Cash rebates, like Bonus Cash, are cost reductions applied at the time of purchase to reduce the price. However, you can opt to take all or part of the rebates in the form of a check. Note, in many states, the rebates are deducted before the sales tax is applied.
Incentives given by automaker finance companies include special low APR financing. They generally have eligibility restrictions.
- General rebates - These are customer rebates offered to the general public. They are available to anyone who buys or leases a qualifying vehicle. (No affiliation or recent grad, military status needed.)
- Loyalty rebates - If there is one thing carmakers aim to do and that's keep its customers. That's where Loyalty or "Renewal" rebates come into play. They're offered to customers who already own a vehicle from the same manufacturer.
- Conquest rebates - These can also be called "Competitive" Conquest rebates. These are rebates that apply to new to the brand buyers who have previously owned a competitor vehicle. Be prepared to show proof you currently own a competitor's vehicle to take advantage of this rebate, as it is often required. The competitive brand vehicle usually has to be owned for more than 90 days.
- Recent Grad/Military rebates/First responders - If you're a recent college grad, a veteran or are currently serving in the military, or a first responder, these rebates sometimes referred to as "Bonus Cash" would apply to you. Most manufacturers offer some sort of special rebates for military families.
- Low interest financing - You see automakers advertise low APR rate financing frequently. Know that low interest rates are generally offered only to well-qualified customers so your credit is key to taking advantage of those deals. Also pay close attention to the length of the loan in these situations. Not always, but often, you are forfeiting cash rebates in order to get the low APR.
- Lease-only incentives - Some rebates and special financing rates only apply to new vehicle leases. One is called a "subsidized lease" you would finance with the automaker's captive finance company. The idea here is that the automaker adjusts the residual value of a car to higher than it actually will be at the end of the term, to lower the monthly payment. The residual value is important at the end of the lease, as you'll read in our End of Lease Guide, so read the fine print and understand the deal fully.
- Affiliation Rebates - Here is one you don't often hear a lot about. You'd be surprised at how many unadvertised rebates are available to buyers with affiliations to certain clubs, organizations, companies, and even sports teams. These fall under what is referred to as "Direct Offers". Since these are not advertised, it is worth your time to ask the dealer whether there are any affiliation rebates that you might qualify for, such as owning season tickets to your local national sport team and so on. These vary from dealer to dealer and like other rebates, there are time limits to offers so you must read the fine print. Car Pro Host Jerry Reynolds has the inside scoop on affiliation rebates here.
- Cash allowances or Bonus Cash - This new-car rebate is cash the dealer will apply to the vehicle you select. It's treated like a down payment or money from a trade-in. There are various requirements to qualify for these rebates, like being a college grad or U.S. Military member.
- Private Offers - You may also receive a Private Offer from the manufacturer, timed to arrive in your mailbox at just the right time.
4 Things To Keep In Mind
1. Research advertised incentives before your dealership visit on our Incentives Page:
- You may not know about all the rebates and incentives offered when visiting a dealership, since some can be unadvertised. However, you should go to the dealership with data on current advertised incentives and rebates. The best and most accurate information can be found on automaker websites where you enter your zip code. Financial incentives do vary by market and region so a zip code is essential to this process. We have a link to each automaker here.
2. Read the fine print:
- As we always remind you, you must read the fine print of an advertised deal whether its on TV, online, in an email or on paper when presented to you at the dealership. This advice goes for the entire paperwork process. Exclusions can apply and many offers are specifically for well-qualified buyers, something that hinges on your credit.
3. Understand that special APR financing and other incentives or rebates cannot always be used together:
- Often you cannot get special low APR financing with another offer. You may be forced to choose between a rebate or a financing offer, and decide which saves you the most money.
4. Understand you often have to finance to get the rebate:
- Don't be shocked to learn you may have to finance your car to take advantage of rebate offers. Car Pro Show Host Jerry Reynolds addresses financing with automaker's Captive Finance Companies (think Ford Credit, Ally, Toyota Financial, etc) here and explains why this does need not be a deal breaker when it comes to taking advantage of a rebate.
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