How New Car Rebates and Incentives Work


Buying a car can turn into an overwhelming process that leaves consumers asking, “What just happened. Inundated with sales pitch terms such as rebates, incentives, bonus cash back, and the ambiguous special APR financing, it is not a surprise that many consumers prefer to hang on to a used car for another year or two rather than endure a month long odyssey dealing with a pushy car salesman.

All the car rebates and incentives jargon can leave you feeling numb. Exactly how much money can you save from auto manufacturer new car rebates and incentives? We are here to clear the air and help you make sense of terms such as “bonus cash back now until special APR financing kicks in after one year.”

How Car Rebates Work

A car rebate offered to customers is typically made by the vehicle manufacture to entice customers to make car purchases. Car rebates represent flat sums of money that discount the sticker price of a car, truck, or SUV. Manufacturers create vehicle rebate programs to move slow sellers and clear the inventory of vehicles to make way for the newest versions of the same make and model. Rebates usually range between $500 and $2,000, with the discounted amount offered during specifically designated periods. Every month, auto manufacturers inform their vast network of dealerships about which makes and models are part of a rebate program, as well as how much savings customers enjoy by agreeing to make car purchases.

What Bonus Cash Means

We like bonuses, but the term that gives us more cash on payday does not mean the same thing when it comes to car rebates. Manufacturer bonus cash programs are similar to rebate programs, with a significant twist. Bonus cash means that on top of a vehicle rebate, the manufacturer offers an additional cash back discount on the purchase of qualified cars. Manufacturers offer bonus cash to move the slowest selling vehicles.

What is Special about Special Interest Rates?

Another car dealership term that makes our ears perk up is called “special interest rate.” A special interest rate applies to the annual percentage rate (APR) of interest you pay for a car loan. Many auto manufacturers offer special APR financing to motivate consumers to make car purchases. You have seen the advertisements for vehicles that come with zero percent APR financing for a specified amount of time.

Auto manufacturers typically run Special APR programs for the first year or first two years of the life of a car loan. Special interest rates only work for certain models, and consumers qualify for special APR financing if their credit scores fall within the range considered acceptable by auto dealership finance departments.

Consumers Beware: Read the Fine Print

Auto manufacturer rebate and incentive programs come with brochures that describe the terms and conditions of the programs. Unfortunately, the brochures contain plenty of fine print presenting information most consumers do not read. Although manufacturers do not publicize the requirements of qualifying for rebate and incentive programs (satisfactory credit score, available on a limited number of makes and models) the fine print includes qualification information. Make sure you read the fine print in a brochure accompanying any rebate or incentive program offered by an auto manufacturer.

Dealership Incentives Come in the Form of Discounts

Not all of the money saved by consumers on the purchase of new vehicles originates from auto manufacturers. Dealerships enjoy some degree of autonomy to sweeten the deal for the purchase of new cars. However, dealers do not offer rebates; instead, dealers discount the sticker price of vehicles. Although dealership discounts are often less than what auto manufacturers offer with rebates, dealership discounts can be large enough to motivate consumers to make car purchases.

Customer rebate and incentive programs offered by auto manufacturers can represent effective ways for consumers to save money on the purchase of new cars, vans, trucks, and SUVs. Special APR rates reduce your monthly auto loan payments and large rebates save you a considerable amount of money on the price of a new car. Just remember to read the fine print to ensure an auto manufacturer has not tucked in one or more unfavorable terms and conditions and also check out for great options.

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