In order to move dealer inventory, the factories will offer incentives to the car buyer or dealer. These incentives like rebates, low interest rate financing and other incentives can be an added benefit to the vehicle buyer. Often times the consumer will be given a choice of incentives like a low financing rate or cash back option. The right choice for the car buyer largely depends on individual circumstances.
Which New Car Models Offer the Best Incentives?
Usually the models that aren’t selling well on the dealers lot will have better incentives. When the demand for a particular new car is less than what the factory anticipated, they will often:
- increase rebate amounts
- lower financing rates
- offer free accessories
- offer extended warranties
Late summer and early fall is also a good time of the year for incentives. The majority of newer models (i.e. 2011 model in September 2010) generally come out at this time of the year. In order to move the older models to make room for the newer models, the factory may offer lower prices, better rebates, lower financing or other incentives. The one drawback is the older models depreciated value compared to the newer models.
Choosing Between a Car Rebate and a Lower Financing Rate
Often times the car buyer is faced with a decision of taking a rebate or a lower financing rate. The best choice between a rebate and a lower financing rate depends on which of the two will save the most money. Naturally if the consumer were paying for a vehicle outright, the rebate would be taken
First look at how much total interest would be paid throughout the life of the loan. Then compare that amount to the total rebate amount. If the rebate is greater than the finance charges, the cash back would be the better option. The rebate can also be applied as a down payment that can have a different affect on the total interest paid over the life of the loan.
Other Auto Dealer Incentives to Consider
Besides rebates and lower finance rates, other incentives like some of the ones mentioned above can add value to a new car purchase. Any other incentives that are offered should be weighed for individual needs. Certain incentives can have more value from one consumer to another depending on individual preferences and circumstances.
For example if free accessories are offered and the consumer has little need for add-ons, this type of incentive would have little value. Likewise if the car buyer is offered an extended warranty and plans on selling the vehicle within the new car warranty time limits, there would be no added value.
Before looking for a new car it’s always best to do some homework. If trading in a vehicle to use as a down payment, find out what the car’s worth before trading it in. Do some research for the best financing rates and rebates before visiting the new car dealership. Compare a lease option to a new car purchase before making a decision.
James Clausen - Clausen received a Bachelors Degree in Business Administration in Automotive Management and Marketing at Northwood University, graduating ...
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