Understanding the Concept of Vehicle Rebates
It’s a common misconception that vehicle rebates are offered by dealers.
Most dealerships try and persuade users to believe that it is something they’re offering as a gesture, whereas the manufacturer actually directly offers rebates to increase the sales for a specific period or a particular model.
Just because you’re qualified for a rebate doesn’t mean that you can’t negotiate on the car’s price as well.
Consider the rebate as pre-existing, and proceed to negotiate on the MSRP of the vehicle as you normally would.
No matter what the dealership may tell you, vehicle rebates have nothing to do with a new car’s negotiated selling price.
In most cases, the rebate is applied simply as a down payment. Still, if you have an appropriate down payment or trade-in, you can request a refund from the seller (or adjust accordingly).
Many people simply choose to use the rebate as part of the down payment to help reduce the amount of the car loan.
For example, car A has a sale price of $20,000.
The manufacturer is offering a 10% rebate, meaning $2,000 less off the listed price.
You can use this amount in a way that best suits you.
Rebates are seasonal or short-term promotions. Accordingly, to score the best deals, you have to keep an eye out for ongoing promotions.
You can find details about most of the ongoing rebates from the manufacturer’s website or call them directly.
However, please keep in mind that not everyone qualifies for rebates.
For instance, some manufacturers may only offer a rebate if you finance the car from a lending company they own or partner with. Another possible limitation is on the model or make of the vehicle.
Additionally, there are specialized rebates for specific consumer groups that you may not be eligible for.
Are Rebates Available on Used Cars?
Rebates are mostly offered with new models.
Yet, some manufacturers may run limited time offers on certified pre-owned cars which may include payment credits or reduced interest rates.
Used car rebates or other similar offers are totally at the discretion of the car manufacturer.
If available, most of these offers will need you to sign up for a loan from a lending company recommended by them.
Moreover, it will also be limited to only a handful of models.
Types of Rebates
When you are out in the market to shop for rebates, you will come across the below terms related to incentives:
Also known as buyer cash, this is a type of rebate offered to customers by the manufacturer.
Customers typically apply it to the vehicle's sale price or choose to keep the money for themselves.
Often, customer cash is used to reduce a car loan’s financing price.
Zero APR Financing
APR relates to the annual percentage rate you pay on the portion of your transaction that is financed.
Many companies may offer special APRs, such as 0 % interest on specific models for specified periods.
Depending on your credit score, you may be able to qualify for these. Most manufacturers will need you to get a loan from their list of recommended lenders.
Manufacturers often offer special lease schemes through their in-house financing arms.
In general, these subsidized leases are based on a residual value that is much higher at the end of the lease than the actual value of the car.
In other words, the manufacturers and dealers adjust the residual value to bring down the monthly payment, increasing the selling value of the vehicle.
Let’s say the sale price of a car is $50,000.
If you seek financing from a recommended lender, the dealer is offering you a choice between 0.00% APR or a $2,500 rebate.
The loan offered is at 6.00% APR with a 60-month term. If you opt for 0.00% APR, you will pay $50,000 over the term.
On the other hand, if you opt for the rebate, you will pay 6.00% on $47,500 for 60 months, totaling $55,098.48 by the end of the term.
As you can see, with the first option you are saving money, but with the 2nd option, you will end up paying $7,598.48 as total interest (which is higher than the actual listed price).
Hence, we highly recommend that you consider all options before agreeing.
How to Find the Best Vehicle Rebates?
Plenty of customers review their local newspaper or preferred search engine when it comes to investigating car dealer rebates and promotions.
These days, most car manufacturers promote ongoing offers actively on their social media channels as well.
In case you already know the model of the vehicle, a quick search on the manufacturer’s website will provide you all the details.
Alternatively, you can directly email or call the dealership for more information.
When contacting a dealer, be sure to ask about any additional incentives or rebates offered, as some dealers also offer discounts in addition to those advertised.
The Final Word
If you know where to start, vehicle rebates and incentives aren't really hard to find and can ultimately lead to great savings over time.
However, it is always smart to do your homework beforehand to ensure you’re actually getting the best deal and meet all the relevant eligibility criteria for vehicle rebates.
It’s also wise to do some quick calculations to ensure you’re actually getting the best deal from a rebate, especially if you must finance a vehicle through a manufacturer’s preferred lender.
This can ultimately lead to higher costs over time, so be sure to compare the financing costs after rebates with the terms available from lenders outside the manufacturers network such as credit unions.
With these concepts in mind, a little research can go a long way towards accessing a great deal and benefiting from vehicle rebates.