An incentive paid by a car manufacturer as a way to increase sales of products. For example, slow-selling vehicles or previous-year models still in the dealer's inventory may feature this type of incentive to sell faster than they have been. Typically, a rebate can be applied to the cost of the vehicle or received in cash by the customer. Instead of the rebate, the buyer is often offered special dealer financing. Often, taking the rebate is the better deal.
When shopping, you probably want to save as much money as you can. Rebates are a way to do this, especially when shopping for a car.
Dealer rebates are a way for car manufacturers to get rid of too much inventory. If the car is not sold, they cannot make money on it. Therefore, offering a rebate is sometimes the best way to help the dealer move a car off the lot.
Rebates come in two forms: factory-to-dealer and factory-to-consumer. Factory-to-dealer rebates are usually not disclosed to the consumer. It is simply a rebate that the factory offers the dealer, which the dealer can pass on to the consumer if they wish. The dealer also wants to sell the car, so the dealership tends to pass along these rebates, or at least part of them, to the buyer.
The other rebate is factory-to-consumer. In this case, the rebate comes directly from the manufacturer and bypasses the dealer. It can offer great savings to the consumer.
If shopping for a car, a rebate can really help bring down the total cost. If it is a particular model that is not that popular, chances are the factory has offered the dealer some sort of incentive that can be passed on to you. If, however, it is a very popular model, there may not be any dealer rebate and therefore the price may be less negotiable. Rebates follow the economic law of supply and demand. If there is too much supply and not enough demand, the factory will often do something to increase demand for that car. Rebates are meant to do accomplish this.
