How It Works: Dealer Cash Incentives On Cars

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Senior Pricing Analyst

As CarsDirect’s resident pricing analyst, Alex offers must-know analysis of pricing & incentives to those looking to buy or lease a car. His consumer-oriented coverage of the latest trends and breaking news has been featured in publications such as Car and Driver, Motor Trend, Automobile Magazine and Autoblog.

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, Senior Pricing Analyst - February 23, 2021

Although you probably won't see them advertised, dealer cash incentives can offer significant savings. However, unlike rebates, there are some important catches worth knowing about. Here's a look at the meaning of dealer cash, what brands offer it, and how you can potentially save money when buying at your local dealer.

This article was originally published August 20, 2015 and was last updated on February 23, 2021.

What Is Dealer Cash?

Dealer cash refers to a manufacturer incentive designed to allow special discounting of new cars at the discretion of dealers. This is not to be confused with dealer holdback, which has a completely different meaning we'll cover below. Dealer cash can allow dealers to sell cars at lower prices than they'd be able to normally.

Unlike a rebate, dealers can pass along the savings or keep it as additional profit. While dealers are not obligated to even acknowledge the incentive, it's generally intended to help dealers sell more cars. In some cases, there may be rules prohibiting dealers from combining dealer cash with certain other incentives.

That could present a problem if you plan on taking advantage of financing incentives like 0% APR deals. Another difference with traditional offers is that dealer cash often lowers the sale price of a vehicle before sales tax is applied. In contrast, rebates are generally considered taxable depending on where you live.

In one of the more extreme cases, the Infiniti Q70 featured up to a $10,000 dealer cash incentive before it was discontinued. More recently, the redesigned Acura TLX (pictured) offers up to $1,500 in dealer cash in lieu of a rare 0% APR deal for Acura owners introduced for the Presidents' Day holiday.

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Auto Brands With Dealer Cash

Offers change monthly but here's a look at mainstream and luxury brands that use dealer cash.

Mainstream Brands With Dealer Cash: Honda, Mazda, Nissan, Toyota, and Volkswagen.

Honda typically allows dealer cash to be applied when buying with cash, financing, or leasing. However, Mazda, Nissan, and Toyota sometimes use dealer cash as an alternative to low-interest financing. In VW's case, we often find that the brand offers a special type of incentive called Dealer APR Cash that can be combined with low APR.

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Luxury Brands With Dealer Cash: Acura, Infiniti, Jaguar, and Mercedes-Benz.

Some of Acura's best deals involve dealer cash you can only get when taking out a loan through Acura Financial Services. In contrast, Infiniti generally offers a choice between dealer cash and special APR. When it comes to Jaguar, some of the brand's biggest discounts are actually on the sporty F-TYPE with allowances worth up to $8,000.

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Why Does Dealer Cash Exist?

Automakers that use dealer cash typically do so as part of a strategy to protect their brands. For example, Infiniti almost never advertises traditional rebates. Instead, the brand generally makes dealer cash available to allow dealers to sell at more competitive prices while maintaining an image of exclusivity.

Dealer cash can have a supportive impact on used car values when you consider a $2,000 rebate on a new car may negate the apparent price advantage on a near-new equivalent in the used car market. While there are many variables affecting advertised used car prices, this is something automakers consider.

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Dealer Cash vs. Dealer Holdback

Dealer holdback, another taboo subject, is based on an arrangement between dealers and automakers involving a percentage of a car's value that is paid back to the dealer later (usually quarterly). In contrast, dealer cash is a manufacturer incentive that can change month to month along with normal advertised offers.

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How To Get Dealer Cash

Given the lack of transparency, it may not be easy to find out about some of the best discounts. This may be complicated further if you're comparing prices at multiple dealers. For example, if there's a $1,000 dealer cash incentive that one is passing along and the other is not, that could be a clear advantage.

However, if you're planning on taking low APR, you may not even be eligible for the $1,000 incentive. Mazda doesn't allow dealers to advertise prices below invoice, but you may be able to benefit from what the brand calls Dealer Engagement Cash by negotiating, assuming you aren't interested in a financing offer.

If a dealer representing a brand that uses dealer cash is advertising an incredibly good deal, it's likely that dealer cash is involved. Just be aware that there could be trade-offs depending on how you're planning to buy. And remember that negotiating can get you access to deals that aren't being advertised.

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, Senior Pricing Analyst

As CarsDirect’s resident pricing analyst, Alex offers must-know analysis of pricing & incentives to those looking to buy or lease a car. His consumer-oriented coverage of the latest trends and breaking news has been featured in publications such as Car and Driver, Motor Trend, Automobile Magazine and Autoblog.

Follow On: Twitter

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