Buying a new car, truck or SUV is always a major decision. A new vehicle's price often represents a significant portion of the buyer's savings or sets them up for years of monthly payments. However, car dealers and automakers offer a variety of incentives to encourage drivers to choose a new car instead of a used model. The best incentives will vary from buyer to buyer based on their specific needs and what sort of other incentives are available at any given time. Knowing the different types of incentives that may be available is the first step in making a good purchase decision.
Rebates
One of the most common forms of auto purchase incentives is a cash rebate. This incentive may have various names, including cash back or bonus cash. When a cash rebate applies only to owners of a vehicle by the same automaker, a cash rebate may be referred to as loyalty cash. In all cases, these rebates represent a lowering of the initial price of the vehicle. Cash rebates are most often applied to models that have sold poorly or when a new replacement model is on the way.
Financing Incentives
Financing incentives are another common sales tactic. Buyers may be able to choose a low-interest financing plan that will reduce the amount of interest paid on a car over a multiyear payment plan. For buyers who don't have enough cash to purchase the new car outright, a lower financing rate may represent an even greater savings than a cash rebate. In some cases buyers can take advantage of 0 percent financing to pay for the car over a specified term without paying any interest. In most cases buyers will have to quality for financing deals based on their income, net worth or credit rating.
Warranties
Although all new cars come with some sort of standard warranty, extended warranties are usually available for an additional fee. Automakers regularly tout the terms of their warranties and cite coverage that may be unique to their brand, or lacking from another. In some cases a dealer may offer an extended or supplemental warranty to make a new car more attractive, either in place of a lower purchase price or in addition to it.
Trade-Ins
Trade-ins are another incentive that is usually managed by the individual car dealership. Since the value of a trade-in is determined at the discretion of the dealer, giving a higher value than expected is one way of promoting new car sales. Some dealers offer a minimum trade-in value that they promise to pay for all cars, including those with significant damage or mechanical problems.
Other Incentives
The list of potential incentives is nearly endless as dealers and automakers constantly try to find new ways to make their products appear even more appealing. While most of the best incentives have already been discussed, other smaller incentives may provide the extra motivation to get a buyer to choose to make a purchase, or to get them to choose to buy from one dealer over another. These may include free gas cards, vouchers for oil changes and other routine service or gifts like a free cruise or home appliance.
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