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Auto Rebates: Who Gets the Money?
by Remar Sutton
Cheap interest rates! Thousands of dollars back! Manufacturers
and dealers are pushing these enticing incentives, and, if
you're a savvy incentive shopper, you may save a bundle. But
be warned: Do it wrong, and you'll throw away those savings
and even pay more.
Here's what's really happening when it comes to "cash back"
promotions, the most popular incentive.
Rebates: Who gets the money? Rebates sound so straightforward:
Buy this car, for instance, and get $2,000 back. In virtually
all cases, the advertisements you see for rebates are real:
The manufacturer, not the dealer, promises to send you a check
after you've bought or leased a particular vehicle. The money,
in theory, has nothing to do with the price you may have
negotiated on a vehicle.
What should happen: The rebate money reduces what you're
actually paying for the vehicle. Let's say you've agreed to
pay $20,000 for a car. The manufacturer agrees to send a check
directly to your home for $2,000 as a thank you. When the
check comes, your total cost for your new wheels is $18,000.
What does happen many times: The rebate money becomes extra
profit for the dealer. For instance, you agree to pay $20,000;
they agree to give you "credit" for the $2,000 rebate. You
should owe them $18,000, but they draw up paperwork showing
you still owe them $20,000. You just lost $2,000. And you
generally won't see this trick occur because the
sleight-of-hand is hidden in paperwork.
How to prevent theft of your rebate money: Don't make that
gift from the manufacturer a part of your negotiations with
the dealership. Negotiate your price on the new vehicle as if
there is no rebate. And then have the rebate check sent
directly to you at home. Never allow the dealership to "apply"
it to the amount you owe them.
Will this work? It will work every time! And, believe me, you
can be sure that $2,000 savings is real when you receive it in
the mail.
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Editor's note: Remar Sutton's car-buying tips have been
featured on "Good Morning America," "Today," "20/20,"
"Nightline," and in magazines such as People, Newsweek, and
Credit Union Magazine. He's president of the national Consumer
Task Force for Automotive Issues. He writes this column
exclusively for credit union members.
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Copyright 2002 Credit Union National
Association, Inc. Information subject to change without
notice. All other rights reserved.
Rev. 8/02 |
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