Car Buying Secrets

How Do Rebates Work?

By: Roosevelt Gist

Manufacturers’ rebates are dollars provided to coerce you to buy a certain model. The amount varies by manufacturers’ make, model and region of the country. They come and go faster than the salespeople can track them. Always ask the salesperson to check the rebate. You may apply this money towards the purchase price or take it in cash. Automotive News, a weekly newspaper, is an excellent source to get an up to date listing of all manufactures’ rebates. This paper can be found in your library, credit union, bank or you may subscribe.

Even though manufacturers don’t like rebates, they are versatile sales incentive tools that can be quickly introduced to stimulate floor traffic in a showroom, during slow selling "slumps". Rebates cost manufacturers and dealers millions of dollars annually. One move to get away from them is what I call the "either or situation" - $1,000 rebate or 4.9% financing. Explaining this requires a column of it’s own.

Why can’t cars be priced fairly upfront? It makes you think that someone came along and said, "that price is too high so lets give the buyer a $1,500 rebate to correct it." Some car companies place rebates on models before they reach the showroom!

Rebates also have expiration dates. These dates are controlled by the manufacturers, not your local auto dealer. If, doing your price negotiations, your salesperson tells you that the rebate expires today and you choose to take the time to "think about it" and subsequently come back to find out the car will cost $1,500 more, don’t blame the salesperson. Negotiate your selling price without including the manufacturers rebate. Use it to further reduce your purchasing price.

The "end of model year" is a rebate gold mine. Dealers and manufacturers must reduce costly inventories and have increased rebates to help accomplish this goal. But remember rebates do expire.

Questions to ask salesperson: What is the rebate on this Vehicle? When does it expire? How much was the last rebate on this vehicle? How long did it last? Will there be a rebate introduced soon for this model?