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Making the Most of Auto Incentives

Incentives can appear in many forms. For a sports team, it's a shot at a gleaming trophy. For a 5-year old, it's a lick of a cherry lollipop. For the car buyer, incentives include price reductions and low interest rates, both of which can help you save big bucks on an auto purchase.

Chances are that you've seen a TV or newspaper ad offering "cash-back" or "zero percent financing" on the purchase of a new car. These are auto incentives, and they commonly take the form of low interest-rate financing and cash rebates. No matter when they occur or what form they take, the auto incentive can be a great bargain for people who are ready to buy. The key is finding the one that works best for you.
Types of incentives

Cash-back rebates can range from $500 to $2,000. The incentives vary widely by region, and tend to apply to higher-end luxury vehicles. Dealers or manufacturers usually offer these cash-back rebates when they have excess inventory.

A great rate on financing is another popular incentive, with rates dipping as low as 0 percent.

The obvious question: Should you choose the cash rebate or the low-rate financing? The answer depends on your financial situation-do you want long-term savings or lower monthly payments?

There are occasions when dealers will offer a combination of both the cash back and low-rate financing. Crunch the numbers to determine which one is the best choice for your personal situation.
Timing is the key

To make room for new models, dealers traditionally offer generous rebates in late summer or early fall. Now that new models are introduced at various times throughout the year, these traditional incentive times are no longer so traditional.

Today, you're better off researching a particular life cycle of a model. If it's been on the market for four to five years, expect a new model to replace it. Minor design revisions occur more frequently; but it's up to you to research the product to find out when these will occur. You can expect some sort of dealer rebates whenever new models hit the show room floor.

Another time to expect a rebate or low-rate financing offer is during a copycat phase. This occurs when a car manufacturer offers a significant rebate or discounted financing, and other automakers follow suit to stay competitive.

Incentives are a great way to save money on a new car. Do your research to find the kind of vehicle that you want to buy. Chances are good that there'll soon be either a cash rebate, or a low-rate financing offered in the next year. The lower price-tag should give you plenty of incentive to buy the car that you really want.

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