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Car Buying TipsEverything you need to know about buying a new car

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Fast Facts

  1. Some rebates and incentives are an either/or proposition; you can only choose one. It's then important to figure out which offers you the most savings before selecting. Getting more cash back up front can be tempting but a lower interest rate might save you more money over the term of the loan.
  2. Rebates and incentives are also often offered around holidays, so keep an eye out for July Fourth or Christmas sales as an example.

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Rebates & Incentives

Deals, deals and more deals

When shopping for a new car, you will notice that the amount you can spend will limit the amount of cars you will be able to afford. Two ways to grab that new car that would normally be out of reach are with rebates and incentives (low-interest financing or APR). Most often rebates and incentives are offered by manufacturers to help dealers sell cars that aren't in high demand. Our Rebate Center is a very useful tool for new car shoppers. Just enter your ZIP code and it will show you the latest cash rebates and low-interest financing offers on every make and model available in your area.

What is a rebate or incentive?

A rebate is a reduction in cost that is refunded to you by the manufacturer after the purchase. The good news is that there are generally no eligibility restrictions on rebates – if you can pay for the car, you'll get the rebate. Note: in many states, you'll still pay taxes on the full purchase price, not the purchase price minus the rebate.

An incentive is a reduced lease or finance interest rate, offered to you by the manufacturer's financing division. Finance/interest rates are also referred to as an annual percentage rate (APR). The bad news is that the incentive interest rates are subject to eligibility restrictions, meaning that if you have poor to mediocre credit, then you won't be eligible for the best rates. In these cases, you might be better off getting a loan somewhere else and taking the cash rebate from the dealer (if there is one).

Sometimes, rebates and incentive interest rates may be combined – for example, $2000 cash back plus 2.9% financing for 48 months. Other times, the offers are "either/or," meaning you can't have both. In these cases, how can you tell which is better – a rebate or low-interest financing? Fortunately for you, we have gone ahead and created a Cash Back vs. Low APR Calculator that will help you figure which is the better deal for you.

Rebates and Incentives

More Facts About Rebates and Incentives

  1. First Things First
    One of the most important things you need to keep in mind during the negotiation process is to negotiate the price of the car before you mention anything about the rebates or incentives. Settle on a good price for your car, then any rebates or incentives that are offered will just equal that much more savings.

  2. How to find Rebates and Incentives
    You could spend all day going from one manufacturer's website to another looking for the latest rebates and incentives – or, you can find and compare all of the latest rebates and incentives for all major makes and models in our updated Rebate Center. While looking for bargains, you will notice that the most lucrative deals can be found on the previous year's model; the manufacturer doesn't want the dealer to have a lot of old inventory sitting around on his lot.

  3. What is the Most Common Rebate/Incentive?
    Cash rebates from the manufacturer are the most common and least complicated. Cash rebates are money that you get back from the manufacturer after the sale. Here's what you can do with them:

    1. Increase Your Down Payment: If you have $2,000 for a down payment and the rebate is $750, you can combine the two and put $2,750 toward the negotiated price so you can have a lower monthly payment.
    2. The Check is in the Mail: If you already have enough money to put down, you can choose to have the manufacturer mail you the rebate after the purchase is complete, and you'll have some gas money to spend on your new ride.
    3. No Money Down?: You can use the rebate as your down payment if you don't have enough cash handy.
  4. Other Types of Rebates: In addition to regular rebates, there are several different types of rebates offered to special groups. Here are four examples:

    1. Loyalty: Some manufacturers offer loyalty rebates to customers who already own that brand of car.
    2. Conquest: The opposite of a loyalty rebate. Conquest rebates are offered by a manufacturer to lure you away from the manufacturer of your current car. For example, if you currently own a Toyota, General Motors might offer you $2,000 to buy a Chevrolet instead of another Toyota.
    3. Military: Many manufacturers offer special rebates for members of the military with proof of service.
    4. Student: Some manufacturers offer rebates to students who are buying a new car for the first time.

    BOTTOM LINE: If you plan to accept a manufacturer's rebate, don't let the dealer factor that in during the negotiation. A rebate is your money from the manufacturer (not the dealer) and is deducted once the price of the vehicle has been agreed upon. And, you're more likely to be able to take advantage of rebates and incentives if you're open to buying a slightly older design.