What’s the difference between rebates and incentives?
Posted by Bob at Mar 14th, 2008 in New Vehicles, Tips of the Day
Incentives are price reductions that are offered by the factories themselves. This is to increase sales on cars that are not selling or to reduce excess inventory. Incentives can appear in the form of cash back on a vehicle, low rate financing, or a combination of the two. Most national customer car incentives are in the $500-$2000 range. The more expensive the car, the bigger the incentive usually is.Customers can receive the cash incentives directly or they can go to the dealer, to reduce the price of the car. This usually varies by dealer or manager. Many dealer incentives apply to European or Japanese cars, as well as American luxury vehicles. Rebates vary by region.What is the best time for incentives?
You’re much more likely to receive an incentive in the fall or late summer. This is when many Subaru dealers are clearing their lots for new inventory. In addition, year-end allowances are not given to dealers until the new inventory is actually on the lot, so this further increases your chances of getting a good deal, often.
These days, “new model season” actually lasts all year, but you can still watch car “lifecycles” and use them to your advantage. If a particular model of car has been on the market for a while and is due for redesign, you might be able to get a good price on the previous model when the newest model comes out. Each car has a different cycle, so do your homework to find out when the particular model you’re interested in is due for a “refresh” or complete redesign.
In addition, incentives can often set up competition wars between dealers. Therefore, even if your favorite Ford, for example, isn’t due for an incentive, competition from Chevy just might kick these types of incentives into gear anyway. Be careful, though. If the incentive you receive is actually a rebate, that rebate is often in effect for just one or two months. And if an incentive program expires, they are not necessarily renewed. This creates anxiety in consumers that is actually beneficial to the dealer, since this is a way to try to push buyers to buy cars now instead of waiting.
What is a customer incentive?
You usually see these types of incentives advertised on radio and TV. However, you should always check a particular manufacturer’s web site before you buy. These types of incentives usually come as either cash, reduced financing rate, or a combination of both. The customer rebate usually tends to be much more publicized. These types of rebates can be given to specific types of consumers, such as first-time buyers, repeat buyers, or college graduates. They can be nationally set, but more often, they are regionally specific. Many “deals” such as 0% or 1% financing only last for 24 to 36 months, which means that monthly payments will go up thereafter. Even though this saves money overall, it’s a bad option for you if you can’t afford it regardless.
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