Want the latest Car Deals before everyone else?
Enter your email to get early access to deals
August 31, 2020
Wondering what the heck advertisements for cashback, bonus cash, or cash allowance really mean?
Does someone hand you cash when you buy the car?
It's easy to explain, but it's not always a good deal.
Let's take a look.
Looking for Deals? Here's our picks for the best cashback deals for this month.
Table of Contents
A cashback incentive is a rebate provided by the car manufacturer to the customer. The amount typically reduces the selling price of the vehicle (or cap cost if you are leasing), but occasionally you have the option to get a check for the amount.
These terms for cashback all mean pretty much the same thing and are often used interchangeably:
Manufacturers want to encourage sales on certain vehicles. Often times, they are looking to clear out a certain model to make room for the next year's model. It does not mean the model with the deal is of poor quality or value, you can still get an excellent vehicle using this kind of deal. Cash back offers entice car buyers to choose those models, which helps the manufacturer move those cars. The better the manufacturer is doing, the fewer rebate offers they will have available.
Manufacturers may offer these deals at any time, but they are most common during:
Research manufacturer and dealership incentives before buying a car and keep your eye out as new ones become available. Manufacturers typically publish new cash back deals at the start of each month.
Technically, you may use a cash back rebate on anything you want. There are usually two options for using car rebates:
You can also choose how to receive the money. For example, you can opt for a check from the manufacture or apply the offer back to your vehicle. Typically, most people put the money back into their vehicle purchase so they can lower the cost to buy their new car quickly and efficiently.
Many manufacturers offer you a choice between a rebate or low financing. As a buyer, you can choose which offer to accept. At first glance, a cashback offer seems great, but the choice is not always so clear when 0% financing is available as an alternative.
You need to compare the two options closely. Ask the dealer to calculate the monthly payment for the two different scenarios. Choose the option with the lower monthly payments. If those are very close, then you may want to opt for cashback as it can lower your initial loan balance. Keep in mind that 0% down financing will be hard to qualify for without great credit. If you do not qualify, then choose the rebate.
Recommended: Check out our top picks for the best 0% APR deals that come with cashback for this month.
Dealerships may advertise cash back offers, but the dealership themselves do not provide the rebate. Instead, the manufacturer offers the rebate and then authorize the dealerships to advertise them. The manufacturer is the party that provides you with the advertised money back.
Negotiate with the Dealership
While cash rebates can help you save on your car purchase, they do not come from the dealership. You can still get an even better deal by negotiating with the dealer. If you're looking at a car with a large cash rebate offer, negotiate a lower price because dealers will want to move these vehicles off of their lot to make room for the new manufacturers' cars.
Cash rebates are great incentives, but they do not erase your bargaining power as a consumer. Dealers are also looking to sell those vehicles, so try to negotiate an even better price. Additionally, you should examine the other incentives available to make sure you get the best deal.
What does a cashback mean for a new car?
Cashback is a special type of car incentive by manufacturers that give you back a certain amount of the car price. You can then put that amount towards the cost of the vehicle to lower any costs.
Is cashback a better deal than low interest financing?
Many times, the cash rebate is the better deal. However, you need to calculate the loan balance and monthly payments for each to determine the best option for you.
When are cash rebates available?
Cash rebates can happen at any time, but they are very popular during holidays, especially near the end of the year.
Get the latest Car Deals as soon as they come out.
Enter your email to be notified when deals are published (usually once a month)
Posted in Car Buying Tips |