I’ve been in the auto business or an auto journalist for the majority of my life. I study vehicle incentives every single month when they change, and even after all these years, I get confused. Given that, it is no wonder people get cross-eyed when it comes to incentives. The dealers themselves have trouble keeping up.
First and foremost, you should remember that factory incentives are your money and the dealer wants you to have every available incentive you qualify for, that makes their job easier to help you purchase a car. All rebates come from the auto manufacturers direct to you, but the dealers administer them for your convenience. You should think of factory rebate dollars as cash, because that is what they are.
Many of the carmakers are big into sending you private offers. They have gotten good at predicting when you might be back in the market for a car, and they’ll send you mail or email offering you extra cash above and beyond what the public is offered. These are real offers but generally have a time limit on them, so read them carefully.
Another evolution of incentives is alliances and groups. For instance, if you are looking at a Ford pickup in the Texas market, there are extra private money offers for college students, those in the military, members of the American Quarter Horse Association, police officers, and people who are currently leasing competitive products, just to name a few.
Then we get into the quandary of rebates vs. low interest rates. No two cases are alike, and generally you need a dealer’s help to know which is best for you. It is helpful to know what rate you can get on your own to make a fair comparison. For some, your credit union or bank rate combined with the rebates will be your best option. For others who cannot get a great rate on their own, you might be best to give up the cash rebates to get a 0% rate.
I hear from cash buyers all the time who are angry because they have to finance their vehicle to maximize cash rebates. In other words, many automakers offer an extra $1000 or so in rebates if you finance with their captive finance company (Ford Credit, Ally, Toyota Financial, etc). In these cases, it’s best to go ahead and finance to get the extra money, then either pay off the loan or re-finance before the first payment is due and you will not accrue any finance charges, yet keep the additional rebate. There is nothing wrong with doing this whatsoever.
Luckily, the dealers today have the ability to go to the automaker’s database to see which rebates you qualify for with your name and address information, so it is not uncommon for consumers to go to a dealership and find out there are additional monies available they were not even aware of.
I want to stress that factory rebates are your money. You can choose to take the rebates in cash, something we are seeing more and more people do. I have seen a good number of people get a new car, then take a large rebate in cash to pay off other debts, like high interest credit cards.
The main thing is while in the process of buying a new vehicle, if you have questions about incentives, stop everything and understand them fully, it’s your money.