What Is a Rebate on a Car and How Do Rebates Work?

Posted by Charlie Maniates | April 24, 2020

A vehicle rebate is an incentive offered by a manufacturer that can be used to reduce the amount of money one pays for a specified model or set of models in its lineup. Often available for only a limited time, these incentives are available through most of the manufacturer’s dealerships to encourage in-market shoppers to make a purchase sooner than they might have originally planned.

For those of you who are actively looking for a new car, rebates can be quite valuable, so you should certainly take that into consideration if a model you’re interested in has an active rebate offer.

Types of Rebates

Rebates can come in a few different forms, so you should pay careful attention to the type of rebate being offered and how it affects the price you’ll pay. Here are a few common rebates:

  • Customer Cash: Also known as factory bonus cash, customer cash discounts reduce the overall vehicle price by a few hundred to a few thousand dollars, but buyers can also pocket the cash rebate if they so choose.
  • Low Interest Rates: Low interest rates significantly reduce or eliminate the annual percentage rate, or APR, of your loan.
  • Special Leases: Special lease deals typically reduce or eliminate the down payment and offer low monthly payments throughout the lease term.
  • Dealer Discounts: Dealer discounts reduce the price of a vehicle at that specific dealership to compete against other dealers in the area. It’s important to note that these aren’t sanctioned by the manufacturer and come directly from the dealer’s bottom line.

How to Use Rebates

When researching vehicles, visit the manufacturer’s website to find any active offers. If you find one, be sure to pore over the details – some incentives exclusively apply to only a small set of consumers, such as ones with high credit scores, so you want to be sure you’re eligible before making a trip to the dealership.

After you’ve verified your eligibility for a rebate on a car you’re interested in, search our listings to find a model in your area. Then, contact the dealership to inquire about availability and schedule an appointment to see the vehicle.

If you found a car you like and you’re ready to negotiate, be sure to mention the rebate to the salesperson. It’s important, though, to still negotiate the price of the car as you normally would. While the manufacturer is offering an incentive, there are still potential savings available from the dealership itself on top of the discount you’re already guaranteed.

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