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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