How Does Cash Back Work When Buying A Car?

Car manufacturers and dealers are no different than most other businesses when it comes to finding ways to sell more of their products. You’ll see and hear about sales events, discounts, more money for trade-in’s and much more.

While cash back is usually a good thing, before you leap at the chance to “save” money, look closely at the reasons the car maker is offering the incentive.

Most car makers offer some type of incentive on the cars that they sell and the most recognized is an offer of cash back. If you look at incentives on cars, trucks, or SUV’s that don’t sell well, they typically have the highest incentives in order to entice buyers to sell more of them.

Models that are being phased out or those that are being redesigned are also an indicator of possible high rebates or other incentives.

When a car manufacturer offers cash back; usually it’s in the form of a rebate. Of course, to me cash back sounds much better than a rebate. When I think of cash back, I think of money in hand. When I think of rebates as related to buying a car, I think of the car just costing a little less.

Actually, they’re one in the same. You can take a cash rebate or cash back as a discount off of the vehicle you’re buying.

Some customers ask me whether they should take the cash back or rebate as a check directly to them. When buying, it makes sense to have the rebate taken directly off of the price of the car. That way, you’ll end up paying less in sales tax.

There are typically also low financing rates and leasing offers on some models as well as the rebate. Not all models of a car’s line have the same incentives. Usually the best selling models will have the most frequent incentives.

Car manufacturers also come out with incentives based on what their competition is doing. If Ford offers a cash rebate on its Taurus, chances are that Chevy will do the same with the Malibu.

Finally, most incentives go from month to month or sometimes a couple of months. Even the dealer doesn’t know what is going to happen the month following the current one so if you’re planning to wait to see if they change for the better, be careful because they may change but, get worse for the particular model you’re interested in.

The worst news would be if the incentive went away completely and you had missed out on it.
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Should I Have my Car Serviced at the Dealer?

There are many options available to you to service your car today. You can certainly have the vehicle serviced at the dealership you purchased from but, is that always the best idea? The answer depends a lot on you.

Let’s eliminate, in most cases, the first alternative. Unless you are a mechanic or just love to work on your vehicle, most of us will only check under the hood when something’s wrong.

Working on your vehicle today is a choice most of us stay away from when the car needs service. Cars today are much more complex pieces of machinery than they were in year’s past and just diagnosing the problem requires special instruments.

The most important point is to have your vehicle regularly serviced at a service center that you trust and that you know has a good reputation. This doesn’t have to be at a dealership. There are many extremely qualified auto mechanics that work at or own there own service centers.

Many people worry that if they don’t have there car serviced at the dealership where they bought it, that the manufacturers warranty will not be honored. That’s completely false. As long as you have the vehicle serviced regularly at the manufacturer’s specified interval by a qualified service center, the warranty will be honored.

Along with having the vehicle serviced by a qualified service center, the second most important point is to insure that you have good records on any and all service you have done to the vehicle. This includes regular oil changes and other routine service.

This is important if you need to use the warranty because of a problem that would be covered and it’s also important if you end up selling the vehicle at some point.

If there was another vehicle for sale exactly like yours and the sale price was the same but, one seller had all of the service records and the other seller had a few receipts from Jiffy Lube, which vehicle would you buy? Exactly.

While it’s convenient to have work done at franchise or chain operated shops such as Pep Boys and Firestone Service Centers, I’m not a big fan of these places. I’ve personally had an experience where I had an oil change done and the mechanic forgot to put the oil cap back on the engine block.

I didn’t realize this until the low oil warning light came on a couple of months later. When I opened the hood, not only was the cap not screwed on, there was also an oil sheen over a good part of the engine where the hot oil splashed out.

That’s not to say that they’re all bad but, just be cautious.

So, keep your vehicle running well by having regular service performed at the manufacturers’ specified intervals and make sure to use a qualified service center for repairs.
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No Haggle Pricing, a No Win Deal!

I recently read something that made me cringe and if it doesn’t give you the same feeling, call me when you’re in the market for a car. Please!

“Chrysler Looks to Offer Fiat 500 Shoppers a No-Haggle Experience “ was the headline of the Bloomberg article.

It quotes the head of Fiat in the US as saying, “Chrysler Group LLC wants dealers to avoid haggling with shoppers over the price of the Fiat 500 when reintroducing its parent company’s brand to America, betting that will make young customers more comfortable in showrooms.

Sure, that’s exactly what every car dealer wants to do. They want to make you as comfortable as possible with free coffee, popcorn, and shiny new cars waiting for you to crawl inside and fall in love.

That doesn’t mean you have to feel that way when you walk into a dealership. Even if you do feel comfortable (soak your head in cold water if you do!), any time you’re on a car dealer’s lot, it’s a business trip for you and they’re going to take your money!

What does “no haggle pricing” mean to me? Let me translate: The car manufacturer, along with the dealer decides how much profit they’ll take on every vehicle they sell. In other words, they decide how much money they’ll take from you and you don’t have a choice.

Not only do they take as much money as they want; they also work much less harder to do so. You either buy the car at the price listed or not. No more offering a lower price and having them go back to the “manager” to see if they’ll accept the price.

The Fiat 500 is the car that Chrysler (owned by Fiat) is running this scam, I mean running this program with. The 500 is also a car targeted to be sold to the younger generation. Evidently, they feel that young people don’t care how much money they spend on automobiles

“The pricing is the pricing,” said Laura Soave, head of the Fiat brand in North America. “The younger generation doesn’t haggle. They don’t feel comfortable with it. They hate the experience.”

Well, isn’t that nice. Sparing the “Younger Generation” the pain of actually negotiating a fair price on a car because they hate the experience and don’t feel comfortable with it.

I think its Fiat/Chrysler who doesn’t feel comfortable with it and hates the experience, because they couldn’t otherwise charge what they’d like!

If you don’t mind being taken for an expensive ride, then buy one of these “no haggle” cars. If you’re like me though, do your homework on the actual cost of the car and negotiate until you get the deal you deserve!


If you’re in the market for a car and want an expert to haggle the price for you, contact me at ProAutoBuying.com or 401-965-3822, and I’ll get you the best deal possible.

Certified Pre-Owned Cars

Certified Pre-Owned, Good as New?

Not quite but, it could be the right alternative for you when a new car’s cost is just too much and you’re concerned about buying a used car with problems.

Certified Pre-Owned or CPO’s for short have actually been around since the late 1980’s and began as a way for luxury vehicles most often leased, to be sold again with a lot of miles to go.

CPO’s have moved into the mainstream now so you’ll see the Camry’s and Accord’s as well as the Lincoln’s and the Chevy’s being re-sold as CPO’s.

What is the difference between a CPO and a used vehicle?
The first thing to know is that they’re both used vehicles but, the biggest difference is that the CPO car typically has a factory or dealership warranty that guarantees the vehicle in case you have mechanical problems.

A CPO vehicle depending on the manufacturer, goes through an extensive check up when it comes back to the dealership. Some manufacturers advertise that they have 150 point checks for these vehicles.

The standards for the condition of parts such as brakes, belts, clutch, etc. are pretty high on CPO’s. The rationale is that the manufacturer would rather have something replaced when the car is at the dealership rather than having the car break down on the road.

Also, if the car were to break down on the road as a CPO, the driver may lose faith in the manufacturers’ products and when the time comes to replace the CPO with a new car, the driver may look elsewhere if they’ve had issues with the CPO.

Certified Pre-Owned vehicles are more money than an equivalent used car with similar mileage and in similar condition. The reason is that the warranty (insurance) costs the dealer and/or manufacturer money and since they’ve repaired the car and backed it up with a warranty, you end up paying for that.

CPO’s are usually no more than 2 to 3 years old and have low mileage. The dealership would have to pay more to insure (the warranty) the car and the chances are greater that there will be problems the older the vehicle is and the more miles it has on it.

So is it worth paying the extra price for a CPO? Like most other considerations, it depends on your current situation. If you want the peace of mind that comes with having a “like new” used vehicle that’s warranted and you can’t afford a new car, then yes it’s probably worth it.

If the car is for your college aged son who likes to tinker around with the engine and other parts of a car, it may not be worth paying the extra money, especially if the student is basically driving to and from class once per day.

If you decide that a Certified Pre-Owned car is right for you, do some research on the vehicle you want, go to some dealerships to see what they have available, and negotiate the price of the vehicle.

In the end, a used car is a used car but, with a CPO you’re getting a vehicle that’s been thoroughly checked and is backed by a warranty. So enjoy the ride!
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