Great Car Deals – or Dealer Scams?

good car deal or scamCar buyers often ask if the great new car deals being advertised on TV and in newspapers are some kind of “bait-and-switch” scam by dealers and if they can actually expect to get the deals if they go to a dealer.

The short answer is, yes, these are legitimate good deals and are not dealer scams.

Here’s why.

Car companies are very competitive and want to attract buyers with promotional deals. The companies actually lose money but consider it a good investment if they can win customers.  It’s simply part of the cost of doing business.

Car incentives can come in the form of cash-back rebates, loyalty bonuses, low-interest loans (even 0%), and special lease deals.

American car makers typically have the biggest and best rebates, and low-interest loans. European companies, such as Mercedes, don’t often have large incentives with the exception of BMW, which frequently has great lease deals on nearly every model. Asian (Japanese and Korean) companies are most likely to have the best lease deals. Low-interest and zero-percent loans are very common these days since “normal” new-car interest rates are already low — around 3.0%.

So what’s the catch?

Although we’ve established that manufacturer incentives are actually good deals and well worth buyers’ consideration, there are some things to be aware of. First, all such “offers” are only available for a short time, typically only a month.

Second, only certain models and styles will have incentives. If you like the promoted models, great, you get the deal. Otherwise, you won’t be able to extend the deal to other models and therefore must go with a conventional non-promotional deal.

Now, here’s where some buyers think they’ve been the victim of a “bait-and-switch” scam. Most car company incentives come with a stipulation that the vehicle must come from existing dealer inventory. Since the incentives are offered nationally or regionally, the company can’t guarantee that every dealer will have a supply of the promoted vehicles for the duration of the promotion. Some potential customers may find that his local dealer doesn’t have the vehicle he wants.

Dealers, not wanting to lose a sale, will almost certainly try to sell either another promotional vehicle, or a non-promotional vehicle, that won’t quite be the same great deal. Customers can always try to find the vehicle at another dealer.

Another situation in which customers may feel “tricked” is if they go to buy (or lease) a promoted vehicle and discover that their credit is not good enough to qualify.

All manufacturer-sponsored low-interest and special lease deals require that customers be “highly qualified.” These terms are usually found in the “fine print” describing the offer. Rebates are not subject to credit restrictions. Buyers are wise to know their most recent credit score before visiting a dealer in pursuit of a promotional deal. If you don’t know your current credit score and rating, you can get it online, quickly and easily. What’s your FICO score? Find out now when you check your credit report for $1 at Experian.com!

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