What are Car Incentives Anyway?

forinfoWhat is all this about car incentives?

What is an incentive? Is it just car dealer hype and come-on?

Are incentives worth looking at? Are they really good deals?

First, an incentive can be anything that helps promote sales or leasing of a dealer’s or manufacturer’s vehicles. Typically, incentives come in the form of cash-back rebates, zero interest loans, low APR loans, lease deals, bonus cash, loyalty cash, military rebates, factory-to-dealer cash that can be applied to customer discounts, and buyer protection programs.

Dealers can also offer independent incentive programs, using the manufacturer’s money, or not. These typically come in the form of special price deals or low-payment lease deals.

Are these incentives actually good deals?

Yes. Some deals are better than others, but all are good deals. Manufacturers lose money on the deals, hoping to boost sales and reduce inventories for long-term gain. If the incentive program doesn’t produce the desired results, the manufacturer loses while customers win.

In most cases, when a cash-back rebate is offered, along with a low-interest loan, customers must choose one but not both.

We generally advise that it is better to choose the cash rather than the loan deal, especially if the customer is short on down payment money. The rebate can be applied as down payment money, just as if it comes right out of the customer’s pocket.

If you are looking for car lease deals, American car makers have either stopped or significantly reduced leasing, and are offering no lease incentives. This means dealer’s must arrange leasing through other finance sources such as national banks and credit unions. Honda and other foreign car makers are still offering leasing and, in fact, are taking advantage of the opportunity to offer some great lease deals.

For more information and advice about car leasing, see LeaseGuide.com.

Most automotive consumers know that you nearly always negotiate prices with dealers. But many forget that little detail when they know they are getting a nice factory-to-customer rebate or low interest loan. Remember, dealers are not contributing to these rebates and loan deals, which means you should expect the dealer to also kick in with his own share of a good deal in the form of a price discount.

Always negotiate additional discounts even when you are getting manufacturer incentives. Do not let dealers tell you that you can’t get a better deal.

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