About Incentives and Rebates

Manufacturers provide Cash Rebates directly to the customer at the point of sale to reduce the net price of the vehicle. Consumers normally elect to credit a cash rebate as a down payment against the new vehicle's purchase price.

However, there are many instances in which customers are allowed to choose either a Cash Rebate or a Low Interest Financing offer. In these cases, you may find it useful to utilize the Low APR-vs-Cash Back Calculator to help you make this decision based on your individual circumstances. In still other cases, customers may benefit from both the Cash Rebate and the Low Interest Financing offers in combination. This varies by manufacturer. It is important to note that the advertised Annual Percentage Rate (APR) quoted in the offer is normally based on the top customer credit tier and not all consumers will be eligible for this best rate.

Manufacturers often offer Special Lease programs through their captive financing companies. Most of the lease programs listed on Edmunds.com are of this variety and are known as a subvented (subsidized) leases. Subsidized leases such as these are generally based on a Residual Value much higher than the actual worth of the car at the end of the lease and/or an interest rate, expressed as a Money Factor that is subsidized to result in below market rates. Each Special Lease program specifies the monthly payment, the Term, any Down Payment requirement, the Security Deposit, and the annual Mileage Allowance. The estimated monthly payment is based on a typical amount financed and typical Down Payment. The sales price of the vehicle, as well as the Residual Value, Lease Term, Security Deposit, Acquisition Fee and down payment may be negotiated, but they will in turn affect the monthly payment amount. In other words, you might be able to negotiate to a $0 down payment, but your monthly payment would increase commensurately to compensate.

While Cash Rebates, Low Interest Financing, and Special Leases are made available directly to the buyer, manufacturer to dealer Marketing Support is made available exclusively to the franchised dealer for use in marketing their vehicles. Most commonly represented as a Dealer Cash Incentive from the manufacturer, dealers may or may not choose to pass some part of this Marketing Support money on to their customers. Frequently, the salesperson will not even be aware of dealer marketing support programs, but, not to worry — our Edmunds.com True Market Value price has already taken these programs into account.

Also known as a "bank fee," an "administrative fee" or an "assignment fee." For a vehicle lease, a fee charged by the leasing company at the inception of the lease that is intended to cover a variety of administrative costs, such as obtaining a credit report, verifying insurance coverage, checking the accuracy and completeness of the lease documentation, and entering the lease into its data and accounting systems.

Rebates provided by the manufacturer directly to the customer at the time the vehicle is purchased to lower the final price of the vehicle. Consumers usually may elect to either receive this amount in cash or to credit the rebate as part of the vehicle's down payment.

Are typically paid to the dealers by the manufacturers to stimulate sales momentum or reduce inventory pressure for certain vehicles. There are many variations, but the most common dealer cash incentive structure provides a cash credit to the dealer upon the sale of a vehicle in the program. In other cases, dealers earn cash bonuses when they achieve sales volume targets. However, there are also programs where dealers earn the incentive upon purchasing the vehicle from the manufacturer. These programs vary widely, but in all cases the Edmunds.com True Market Value Prices have taken these cash incentives into account.

An amount charged by the leasing company at the end of a lease that is intended to cover the cost of retrieving and selling the vehicle if the lessee chooses not to buy it. The amount, which varies by leasing company, is disclosed in the lease agreement. The lessee is billed for this charge after the vehicle is returned.

A cash payment credited against the purchase price of a vehicle, which reduces the amount to be financed. In a lease transaction, this amount is often referred to as the "capital reduction."

For a vehicle purchase, the cost of credit (i.e., the interest rate) expressed as an annual rate.

An auto industry term that encompasses all methods by which manufacturers attempt to stimulate vehicle sales and leases by reducing the net cost to consumers without reducing the vehicles' MSRPs, which includes customer rebates, dealer cash incentives and special leases.

The number of months that constitute the term of a vehicle lease.

A loan offered by the manufacturer's captive finance company at a below-market interest rate. Eligibility is normally determined based on the customer's creditworthiness.

An auto industry term that describes programs that manufacturers provide to stimulate sales or assist dealers in the advertising and marketing of their vehicles. The most common program is Dealer Cash Incentives.

In a vehicle lease, the number of miles the lessee is permitted to drive over the term of the lease without incurring an excess mileage penalty. If a customer expects to drive more miles than the standard lease allows, it may be beneficial to buy the right to drive additional miles at the inception of the lease (which will have the effect of reducing the Residual Value and thus raises the monthly payment), as opposed to paying a mileage penalty at the end of the lease.

Also referred to as a "lease factor" or "lease fee." An auto leasing industry term for expressing the interest rate used to calculate the monthly lease payment, and equal to the lease's APR divided by 2,400. (For example, an APR of 7.2% equals a money factor of 0.0033.)

A vehicle leasing company's assumption of what a vehicle will be worth at the end of the lease, which is a factor used to determine the monthly lease payment. (The higher the residual value, the lower the monthly payment.)

A payment required at the inception of a vehicle lease to provide collateral to the leasing company for the lessee's promise to comply with the terms of the lease. Any unused amount is refunded to the lessee at the end of the lease term.

Also referred to as a "subsidized lease" or "subvented lease." A form of "incentive and rebate" that consists of a vehicle lease offered by a vehicle manufacturer in which the amount of the monthly payment is reduced below that then offered by independent leasing companies (the cost of which is absorbed by the manufacturer). Typically this is accomplished by using a higher residual value or a lower interest rate, or both.

Also referred to as "Drive-off fees." The total cost that must be paid by the lessee at the inception of a vehicle lease, which typically includes the first month's lease payment, any security deposit required by the leasing company, any acquisition fee charged by the leasing company, any documentation fees charged by the dealer, and various state registration fees.