What are Car Buying Incentives, Really?

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Teen's first car after graduation
Such a deal!
When looking to buy a new car, we've all been barraged by offers and ads talking about cash back, customer rebates, and finance incentives. But what's the difference between cash back and incentives? What are car buying incentives, really? Never fear, Lithia Motors is here to separate and explain what these various money saving techniques are all about. Will they save you money? You bet!
 
A well-informed buyer can pay less for a vehicle by being aware of new car incentives, rebates and discounts. Knowing about these and using them to your advantage can possibly save you thousands of dollars.

Factory Incentives & Cash Back.

First off, customer rebates and factory incentives from automakers are marketing programs that are created to get customers to buy new cars. We all know that. These various programs come in different forms. Many are heavily advertised, while others have to be ferreted out to find them. But all of these can be used to save you some serious money on a new car purchase.
 
Car manufacturers have a couple of different avenues to offer financial support to dealerships when marketing new cars. Automakers will often run special incentive programs at different times of the year to boost sales. These programs are used to stimulate car sales and they include customer cash back rebates from the automaker as well as manufacturer to dealer incentives. There are also finance incentives, lease deals, loyalty programs and bonus cash. All of these incentives can help you buy a car for less money. Here's what you need to know about how these programs work. 
Manufacturer to the Consumer
The following are programs that come directly from the manufacturer to the consumer. Sometimes more than one of these deals are available to you at the same time. They include low interest financing, special lease programs, and cash back rebates. Some automakers also offer:

  •  Military discounts
  • First-time buyer incentives
  • Special deals for college graduates and more
There are even "loyalty reward" incentives for buyers who are sticking with a particular brand of car and "conquest" bonuses for buyers who are switching from a competitor's vehicle. Amazing, right?
Secret Incentives
Each dealership can negotiate cash incentives that come from the manufacturer. These are sometimes referred to as "secret incentives." Dealers don't have to offer these to you. Finding out if the specific car you want to buy has a customer rebate can be tricky. You should definitely ask the dealer about all the incentives that are available to you. 

Imagine if you are looking at the same make and model of car at two different dealerships and one is offering a $1,500 cash rebate while the other isn't. Lithia Motors can help with that. 
Cash Back Rebates
Most of us have heard of the common form of incentive called "Cash Back." This is when the automaker offers cash directly to the car buyer when they purchase before a specified date. Often, these types of rebates mean that the car in question is not selling particularly well. Cash back rebates range from

Manufacturers provide customer cash rebates directly to the car buyer in order to reduce the price of a new car. Customers often use this "bonus cash" as part of their down payment towards the purchase of a new car at the time of purchase. Some new cars, trucks and SUVs will offer you both a cash rebate and low interest rates when you finance through the automaker. However, most of the time, unless specified to the contrary, you will have to choose between these two offers. You'll want to look at both the cash rebate amount as well as how much you might save with the low interest loan and see which saves you the most money.
Low Interest Financing
You can often get an incentive in the form of ultra-low interest rates. We're talking zero to five percent for up to 72 months. Remember that factory to customer incentive programs vary by every manufacturer. Low interest financing that offers an attractively low annual percentage rate (APR), is usually reserved for customers with top of the line credit scores. In other words, if you have less than perfect credit, you may want to go for the cash back or customer rebates than try for the low interest financing.
Special Lease Deals
Manufacturers also offer special lease programs that are available through their finance companies. Also known as subsidized leases, these are usually based on a residual value of the car that is much higher than the vehicle is actually worth at the end of the lease term. Low rate leases often include a number of fees that you should be aware of including a down payment, security deposit, mileage allowance, etc.
Understanding Offers
To better understand how these offers work, let's use our Lithia Motors Incentives Page to look for a car. For this test, we'll filter our search by make and model for a 2021 Audi A6 sedan. As you can see from the 2021 Audi A6 Incentives, there are six offers available including two finance offers and four cash offers.

The financing offers range from 0.99 percent APR for 24 months all the way up to 3.39 percent APR for 72 months. Make sure you check to see how long these specific offers are valid for. The cash offers for this Audi A6 include $4,000 cash back from the manufacturer on select Audi models including the A6 and S6, a $1,500 cash back offer, a $2,000 Associate Benefit affiliate offer, and a $500 cash back Loyalty Offer for those who owned an Audi and are trading in for a new one.

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Read the Fine Print

The bottom line with all special rebates, incentives and special lease deals is to be sure to read and understand the fine print of your contract. Make sure you understand what you are paying for, what the interest rates are, and what the "hidden" fees might be, before signing on the dotted line. 

Like special incentives that offer low interest rates, special lease deals are usually reserved for customers with really good credit.

Let Lithia Help.
At Lithia Motors, we can help you to get the very best deal on pretty much any make and model of vehicle. Use our Incentives Page to find vehicles that include various incentives that could save you some big money. Discover the rebates and cash back incentives that are available to you right now.