Cash back deals
Cash back isn’t a magic bullet.

We’ve all seen it more than once, in print and on TV. Car dealerships are offering cash back when you buy a car. And used correctly, cash back deals can save you a bundle. But it’s important to know exactly the deal you’re getting, and why you’re getting it.

Why Do Dealerships Offer Cash Back?

It seems a bit counterintuitive that a dealership would ever give you money to take a car off their hands, but they have their reasons. Generally a cash back deal is offered for one of two reasons; the manufacturer is worried about their customers switching brands in a specific category, or there’s a particular model of car that isn’t selling and that they need to get off the lot. Cash back incentives are generally tied to a specific model of car, although several models can have cash back incentives at the same time.

You need to be aware of the exact reason a car is being offered under a cash back incentive before buying. Sometimes a model of car just doesn’t catch on … but other times, it’s not selling for excellent reason. So before you get excited for your cash back, look closely at the car you’re buying with it.

Another point to be aware of is that dealers are not under any obligation to tell you about cash back deals, so do your own research on what cash back incentives are out there and why. That’s especially important with the two types of cash back incentive.

What Types Of Cash Back Deals Are There?

Cash back deals come in two forms. The first is “customer cash,” which is exactly what it sounds like, a rebate given to the customer by the manufacturer. Most cash back deals have specific requirements, depending on the motives behind them. For example, a “loyalty” customer cash deal would depend on whether or not you own an older model of the car you’re buying. And yes, they’ll want proof. Or it could be a “conquest” deal, where you prove you have a specific car from a competitor.

Cash back deals
Make the right deal with cash back.

The biggest catch, however, is generally that you’ll need to finance your car through the automaker’s auto loan arm. While getting the money back, or applying it to the price of your car, can be a smart deal, do the math first and make sure you can’t get better financing elsewhere.

Ironically, the type of cash back more useful to you is the one you don’t see. “Dealer cash” is a rebate between dealer and manufacturer, and generally that’s disclosed. Remember the phrase “factory-to-dealer incentives?” That’s what this cash back deal is.

Keep in mind, dealers aren’t under any obligation to pass the savings onto you, but they often will. And even if they’re not willing to do it directly, you can get a deal by offering a low price and sticking to it. If you’re fully aware that they’re getting incentives, and make it clear you’d prefer they factor that into the price, you can often get a better deal.

In other words, look up incentives carefully, and do the math before you go to the dealership. The best cash back, after all, is the cash you don’t have to spend in the first place.

Get on the road today.

 

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