The Truth About New Car Incentives

While rebates and incentives are a good way to lower the drive-away price on your new vehicle, it's tricky deciding which ones make the most sense for you.

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New car incentives - cars in row at dealership
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Navigating new car incentives

Cash incentives are the kings of new car incentives, as in most cases, these provide customers with the highest potential savings on their new vehicle purchase. Cash incentives are subtracted directly from the selling price of the car, or MSRP, and lower the total drive-away price for the vehicle. These incentives are openly advertised to the public and do not require any additional negotiation to receive them. The catch, however, is that consumers who opt for cash incentives have to be willing to purchase their new cars outright, without the help of manufacturer finance and leasing options.

That said, a little-known fact is that most cash incentives are actually combinable with third-party financing options offered by most banks and lending institutions, which in some instances can actually result in a lower monthly payment compared to financing with the manufacturer.

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New car incentives - Couple buying new car at dealership
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Finance and lease incentives

It’s not only cash purchasers who qualify for new car incentives. In fact, the increasing popularity of financing and leasing in Canada has pushed auto manufacturers to make finance and lease incentives more attractive than ever before. Much like cash incentives, finance and lease incentives are available to the public and subtracted from the market suggested retail price (MSRP). However, these are combinable with the manufacturer’s finance and lease rates and lower your total monthly payment.

Find out how much dealers make on the sale of a new car.

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Customer and car salesman at dealership
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Special finance and lease rates

Not all manufacturer incentives come in the form of price reductions like the ones mentioned previously. In addition to rebates, most car manufacturers offer “special” rates to qualifying finance and lease customers with top-tier credit, making it easier for them to get behind the wheel of a new car. Special rates are usually lower than those offered by banks or other lending institutions, and start as low as 0% for certain brands, meaning that you don’t have to worry about paying interest on your new car loan or lease.

Find out the best time to buy a new car in Canada.

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New car incentives - woman buying new car
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Dealer discounts

It’s important to know that there’s a clear distinction between manufacturer incentives and dealer discounts, and that dealer discounts can be taken on top of in-market incentives. While manufacturer incentives are available to all consumers and are offered by the automakers themselves, dealer discounts are negotiated between the consumer and the dealer. The size of a dealer discount depends entirely on your ability to negotiate and the dealer’s urgency to get the car off the lot. Consumers wishing to do their own negotiation on a new car should aim to pay anywhere between three- to seven per cent above a vehicle’s invoice price for mainstream brands and upwards of nine per cent for luxury brands.

Get the best price for your new wheels by side-stepping these common car dealer tricks.

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