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The Great Rebate Debate
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| Competition has made Rebates a Common Sales Technique |
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| Updated |
Jul 7, 2004 20:30:43 |
| Rating |
 16 ( -2 -12.5% ) |
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Description:
Rebates, incentives...are they worth the trouble to investigate? Or is it all just another advertising gimmick? If you like saving a thousand bucks--or more--on a new car purchase, rebates and incentives are very much worth your while. Indeed, while rebates used to be "special" deals for unpopular and base-level models, that's changed--a major part of every auto makers' sales arsenal includes rebates for the hottest selling cars on the lot. Current incentives What is an incentive? The best time for incentives? What exactly is a customer incentive? Should I take the cash back or the cut-rate financing option? What exactly is a dealer rebate? Any other kinds of dealer incentives? Incentives, for some models, can shave more than $1,000 off the dealer invoice price you began with in hitting your target price. These special deals used to be offered only on slow-selling or base-level models, but auto makers are now discounting even hot-selling, fully-loaded vehicles. The cutthroat auto market means they’re all spending more than ever—good news for consumers. Different manufacturers have different incentives 'styles.' Honda typically rejects cash rebates, and US carmakers tend to pour the most into nationally-advertised cash rebates. Note: now that cars are simply better made, a rebate is not necessarily any reflection on the quality of the vehicle, but a tool to adjust pricing so it meets the current, local market conditions and sells. What is an incentive? All incentives are price reductions offered by the factories either to increase sales on current slower-sellers or to reduce excess inventory. Incentives can take the form of cash back, low-rate financing, or a financing deal AND cash on the same model. National customer incentives tend to be in the $500 to $2,000 range. The pricier the car, often, the bigger the incentive. Cash incentives can go directly to the consumer or to the dealer. Some go either to the dealer or the consumer, and that can vary regionally, It can be left to the dealer's discretion, or the discretion of the regional manager. Dealer incentives tend to apply to Japanese and European-made cars, and American luxury vehicles. Rebates vary significantly by region. Any national consumer rebate at Autobytel.com is the MINIMUM rebate you are eligible for—other local, less publicized incentives may exist. Some national programs will not apply to all regions.
Current Manufacturer Incentives
Buick
Cadillac
Chevrolet
Chrysler Dodge
Ford
GMC
Jeep Lincoln
Mercury
Oldsmobile
Pontiac Plymouth
Subaru
The best time for incentives? For decades, new car model season arrived in fall, but now, new model year basically lasts all year long. Late summer/fall is still a time when dealers clear lots for the new models, and a good time for incentives. "Carryover allowances," special model-year-end allowances given to dealers or consumers to clear out last year's inventory, are not the rule anymore. Note: these allowances don't kick in until the dealer actually has next-year's model on the lot. Because new model season lasts all year, learn the 'life-cycle' of the particular model. If a car's due for a major redesign you may see incentives before or when the new-generation or replacement model debuts. Some models have a 4-year cycle between complete redesigns, with a 'freshening' every couple years, but each maker and model is on a different schedule. Incentives tend to work on the domino principal, leading to copy-cat actions between competing makers and models. A rebate on a Chevy truck can lead to similar deals on a rival Ford or Dodge model. Most rebates carry an expiration date--usually in effect for 1-2 months. When an incentive program expires, they don't necessarily renew or change them right away. The time limit on incentive programs can create anxiety for consumers: if you don't rush out NOW you won't benefit. Be calm: often a rebate will return, or even be increased. Use discretion to take advantage of hefty rebates that may expire. If a rebate has been placed on a certain model for some time, good deals should stick around. What exactly is a customer incentive? These are generally the incentives advertised on TV and radio, but to make sure you're informed, always check the dealer and consumer rebates page at Autobytel.com before you buy. Customer incentives usually come as a choice of either cash or a reduced financing rate--or a combo of both. Customer rebate tends to be more publicized. They can be given to special kinds of consumers; college grads, first-time buyers, or repeat buyers, etc. They canbe nationally-set, but are more often regionally-specific. Should I take the cash back or the cut-rate financing option? Add up the full price of the vehicle at the special subsidized financing rate. If the loan ends up costing less with the incentive financing, then with the pay-out in cash--you may want to choose that option. But you may also want to increase your down payment, and then you should choose the rebate money. Calculate both what you'll be paying each month under each option, and how much you will spend overall. The loan calculator makes this math very easy. Remember: do the calculations for each and every car you’re considering. Taking the cash on a $20,000 car with a $2,000 cash rebate may not be as good a deal as taking it on an $11,000 car with a $2,000 rebate. Also: many of the super deals such as 0% and 1% financing are for a briefer 24- or 36-month term. This means stiffer monthly payments. It saves money overall, but it's a bad option if it's out of your monthly budget's reach. If you have the financial freedom, go with what saves you most overall. What exactly is a dealer rebate? Money given back to the dealer by the manufacturer to move certain cars. Information about dealer incentives tends to be more difficult to obtain, as well as more volatile time-wise, and much more regionally-specific. Dealer incentives are often offered in tandem with other incentives that depend on the regional manager's specific judgement call. Don't become too paranoid about less public dealer rebate info. The factories offer them to heat up dealer sales contests to move inventory locally, so most of the deals become public knowledge. A tip: check the date the vehicle you want was actually manufactured. If it's been in the showroom for 6 months or more, some kind of dealer incentive may be placed on it. Dealers pay money to keep cars on their lot (they are financed through a bank) especially after a car's been on that lot for more than three months, and they have an increased incentive to sell. Incentives can be listed for either the customer or dealer --and either the dealer or the regional manager decides which is best for the area. If you know about any dealer incentive, those savings should be passed on to you, the consumer. Any other kinds of dealer incentives? Occasionally, there are special programs in place that offer dealers unusual incentives. A manufacturer may want to help a new dealership get on its feet, and establish a customer base, and will offer them special sales rewards. The factory may want a dealership to take more inventory, and offer incentives to do so. Some programs give a dealer X amount of dollars for selling a certain number of cars by the end of the month, or even more money per car if they reach a certain sales target. This encourages dealers to offer lower prices at certain times of year or month to reach that targeted sales point. All of the above incentives apply ON THE DAY OF DELIVERY. Buying the vehicle on factory order could jeopardize the incentive, if it expires before you actually get the car. |
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