How Do Dealer Rebates Work?

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Even with poor credit.

By

Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


, Contributing Writer - February 9, 2021

If you hear about money-saving rebates at a dealership, they’re actually issued by the car manufacturer. Here’s what you need to know about rebates offered by automakers, and what it usually takes to qualify for one.

Are Car Rebates Discounts?

Rebates are like discounts, but not quite. Also called “incentives,” their main goal is to motivate you to purchase a specific vehicle. There are also different kinds of incentives you might encounter such as cash rebate options and/or financing incentives.

For example: some automakers may offer 0% financing for X-months on a specific model – or possibly they offer to lower the selling price of the vehicle for buying it.

Cash rebates can be subtracted from the negotiated selling price of the car, like a down payment. The dealership gets the money from the manufacturer to give to the consumer. Because of this, dealers don’t lose any money when you use a rebate on your vehicle purchase.

Here’s a real-life example of a rebate offered by Ford:

2020 Ford Fusion: up to $5,000 off the manufacturer’s suggested retail price (MSRP). The MSRP is around $23,000 for the least-expensive trim level.

For this deal, it’s a $4,500 rebate plus a $500 bonus for Fusions that have been on the dealer’s lot for over 60 days. You may have to shop around for the bonus of $500, but that could be $5,000 off the selling price of the 2020 sedan, which could leave the final negotiated selling price around $18,000.

Taking advantage of manufacturer rebates is a great way to lower the selling price of a vehicle, and lower the amount you need to finance. You can also use a down payment or trade-in equity to further lower the selling price. In some cases, you may be able to request a check for the rebate amount if you already have a significant down payment.

Remember that rebates often come with conditions you need to meet, so not everyone can qualify all the time.

Who Can Get Rebates?

Rebates are almost exclusively offered on brand new cars. They’re sometimes offered on certified pre-owned (CPO) vehicles, but it’s not common.

Some rebates are only available to veterans, college students, first-time buyers, or those who already own that manufacturer’s brand. Your credit score matters, too, since most rebates require good credit to qualify for incentives.

If you’re a bad credit borrower with a credit score around 660 or lower, you may find it difficult to qualify for a financing incentive or a cash rebate. New vehicles – with or without the rebate offer – can also be hard to get when you have less than perfect credit since new car selling prices are generally much higher than used.

Shopping for a Car With Poor Credit

As a bad credit consumer, you may have an easier time qualifying for vehicle financing by working with a lender that’s accustomed to tough credit situations. Subprime lenders often assist borrowers with limited credit, habitual bad credit, and even bankruptcy. They’re third-party lenders that are signed up with special finance dealerships.

Subprime lenders can’t offer any rebates or incentives to their borrowers, since those are controlled by automakers. Most times, manufacturers require that borrowers must finance with their captive lending arm (like Ford Credit) to qualify for special deals or incentives – but they often have high credit score requirements for approval. What subprime lenders can offer, however, is a chance at credit repair.

The key to getting your credit score in good shape is taking on new credit you can handle. If you apply for financing with a subprime lender, they take a hard look at your financial stability to determine how large of a car payment you can reasonably handle. By using your personal situation to create a loan that fits you, there’s a better chance that you stay current with the loan and boost your credit score for future credit opportunities.

Find Bad Credit Lending Resources

Having a good credit score is usually one of the main requirements to getting a rebate or financing inventive applied to your car purchase. If you’re ready to turn your credit around for the better, get with us at CarsDirect.

We know where special finance dealerships are located, thanks to our nationwide network of dealers that we’ve built over the last two decades. Get connected to a dealer in your local area by completing our free auto loan request form.

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, Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


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