10 Steps to Buying a New Car
Step 2: New Car Incentives and Rebates
Dealers and manufacturers regularly offer substantial incentives to attract buyers to the showroom. It is important not to let an incentive be the deciding factor in purchasing a car, but you will certainly want to factor this potential savings into your calculations. Incentives and rebates on luxury models can be many thousands of dollars, but the typical rebate ranges from $500 to $2,000.
Think of an incentive as an offer that reduces the amount of money you are going to pay to purchase or own the car. If the incentive does not save you money on the car, it is not much of an incentive. For example, perhaps the dealer wants to throw in two year’s worth of free oil changes. This incentive might be worth $250. However, an incentive like a coupon book with a “value” of $250 may be worth almost nothing if you do not use it.
The most common type of an incentive comes in the form of rebates and low- or no-interest financing. A rebate is money that usually comes from the manufacturer and reduces the Manufacturer’s Suggested Retail Price (MSRP). For example, if the car you wish to purchase has an MSRP of $20,000 and it has a rebate of $2,000, you will pay $18,000 for the car (minus any other incentives the dealer may be offering). Special low- or no-interest financing for qualified buyers can save even more money over the life of the car loan. With zero-percent financing deals, the monthly payment on your $20,000 car would be approximately $350 instead of $405 (assuming 6% interest for 60 months on a typical new car loan). The zero-interest deal saves you $3,300 over the lifetime of the loan. Now that is an incentive!
Limitations- Before you get too excited about incentives and rebates, it is important to note manufacturer incentives usually expire every month and may apply only to certain models or trims. Hot selling models may never have a rebate, where a slow selling model may be routinely discounted. In addition, low- or no-interest loans will have varying terms and conditions. Some discounted loans will be valid only on loan terms under 36-months or may be offered on specific models. Usually, the buyer’s credit must be outstanding to qualify for special interest financing.
You can research current manufacturer incentives and rebates by visiting the Incentives & Rebates section of Autotropolis. This section is regularly updated with new and continuing offers.
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