Incentives typically take the form of cash rebates, low APR financing and special leases. Many carmakers also provide additional incentives to first-time buyers, college graduates, members of the military and other specific customer segments.
Incentives can help you decide among a few vehicles you're considering. For example, Car A and Car B might have the same price, but if Car A has a $1,500 cash rebate, it becomes a much better value proposition.
Manufacturers can change incentive programs at any time. The incentives and rebates listed on Edmunds.com reflect national and regional promotions. Make sure you enter your zip code to ensure that the incentives information is correct.
Know the Incentive Types
Before you learn how to use car incentives and rebates, you must first know what they are. Here is a quick rundown:
Customer Cash: Customer cash, also called bonus cash, is a rebate the manufacturer gives to the consumer. The buyer typically applies it to the price of the vehicle, but buyers can sometimes opt to keep the money for themselves. Bonus cash can also be applied to the finance price of a lease.
A buyer often must meet certain requirements in order to get a rebate. To qualify for a loyalty bonus, for example, the buyer needs to show proof that he owns a vehicle of the same make as the one he's buying. A "conquest" bonus, on the other hand, might require that a buyer show that he owns a competitor's vehicle. Many carmakers also require that the vehicle be financed through their "captives," meaning financing companies they control, such as Nissan Motor Acceptance Corp., or Honda Financial Services.
Dealer Cash: Car dealers sometimes get a form of incentive called marketing support. The most common type of marketing support is called dealer cash. This incentive is paid to the dealer by the carmaker. The dealer is not obligated to pass on the savings to the consumer, but it can influence your negotiation. More on that later.
Low APR Financing: This incentive offers interest rates on financed vehicles ranging from zero to about 5 percent. A buyer needs excellent credit to qualify, however, so not everyone will be eligible. This is why we advocate that buyers get pre-approved for a car loan before they go shopping. That way, they'll have an interest rate to compare to what the dealer offers or something to fall back on in case they can't qualify for a dealer-offered low APR financing deal. The low interest rates are sometimes tied to the length of the loan term, so pay attention to this detail.
In most cases, low APR financing cannot be combined with customer cash. And in most cases, customer cash is a better deal because you are financing a smaller loan amount. But if you want to explore all your options, the Edmunds Low APR vs. Cash Back Calculator will help you spot the better value.