Be careful Those car incentives can do more harm than good

It’s confusing buying a car, and you need to be even more careful when incentives, reduced finance rates and cash-back offers are involved. Read on to learn why.

If you opt to take a rebate, your dealer will suggest it’s the best deal for you and hope you opt for it and sign up for the dealership’s captive financing. However as manufacturers offer rebates, and the money does not come from the dealer’s pocket, you can negotiate for a better price.

Moreover, incentives make dealers sell cars at a higher price than without the incentives because the focus is on the monthly payments and not the overall car cost with interest charges. So it’s advised to set a final price first and then calculate rebates or financing from that point.

Another point to remember about low-interest financing is it’s sanctioned after a credit check. So if you have a spotty credit record, you may not get these low rates as people with poor credit usually end up paying higher finance rates.

Zero % financing usually available only for slow-selling models

Only the shortest loans of about three years come with the lowest rates after which rates tend to rise. So check to find the best rates to apply for, and the limits on any financing deals. Moreover, most automakers offer incentives to get shoppers buy a slow-selling model or just to clear their inventory. Big seller models don’t usually come with an incentive.

If you feel you got a great deal on your vehicle’s price and financing, be alert with the financing part. Think twice before agreeing to any high-margin extended-service warranties and credit life insurance which may be unnecessary for you. If you need more peace of mind with lower payment amounts, it’s always better declining the offer.

Moreover, most car buyers put most of their rebates into moving instead of a high trim car they want or any other vehicle upgrade. If you plan to trade in a vehicle, discuss this last, only after you’ve settled on a price for your desired vehicle. Otherwise the dealer gets an idea of how much you can afford and if the trade-in car’s value can be introduced into the equation and only complicate matters.
So remember that the best deal for your vehicle is a dance between your desired model, its demand, the dealer’s inventory and the available incentives including manufacturer-to-dealer incentives. It’s up to you to think and choose your options and rebates wisely.