Navigating automobile incentives and rebates

Here is a closer look at some of the incentives that may be available:

Dealer incentives. Dealer incentives are factory-to-dealer offers that reduce the true cost to buy a vehicle from the factory, according to Cars.com. Dealers are under no obligation to pass on these cost-cutting measure to customers, but many do just to move stock.

Cash-back rebate. This well-known incentive is based on manufacturers offering cash rebates directly to customers when they make a purchase before a given date. Cash-back rebates are generally offered on models that may not be selling as well as manufacturers had hoped. Some rebates are rolled over from month to month until desired quotas have been met. Think of a rebate as a coupon of sorts applied to the cost of the vehicle.

Low APR financing. With this incentive, dealerships offer low interest rates on vehicles financed through their preferred lenders. Rates may range from 0% to 5%. Keep in mind that buyers’ credit scores need to be fairly high to qualify, and the low APR may only be on certain models.

Lease specials. Customers who lease may find manufacturers often offer special lease programs through captive financing companies. These are subsidized leases based on a residual value that’s much higher than the actual worth of the vehicle at term’s end. Dealers are playing with the numbers to bring down the monthly payment and thereby make their vehicles seem more appealing. RealCarTips says that sometimes dealerships will apply cash-back rebates or financing incentives toward a lease instead of a financed vehicle.

Bonus cash incentive. This type of incentive generally targets a specific demographic, such as recent college graduates or military personnel. These incentives are not widely advertised, so it may be necessary to inquire about what is offered.

Government rebates. Some savings are realized not through the manufacturer or dealer, but from government rebate programs. For example, tax credits may be available to buyers who purchase cars that run on alternative fuels or hybrids.

– Courtesy Metro Creative