Rebates, Incentives, APRs - Questions & Comments

lunarmist · August 2003

This is why Toyota auto dealerships are 4th from the bottom on a list of 39 manufacturers on a recent "sales satisfaction" report by JD Powers.

landru2 · August 2003

you all are up in arms about? The initial post asked about taxing a rebate. Dealers don't keep taxes. They collect as required by the government and are subjected to audits to make sure that they do it properly.

What exactly is the deception? The fact that someone can't get a vehicle for the "be-all, end-all" TMV isn't related to any rebate. Neither is an over-priced car alarm. If there is a $750 rebate then there is a $750 price difference between you getting the rebate and the dealer getting the rebate. What's so tricky about that?

lay2 · August 2003

Well Lundra either you were asleep at the wheel or you find the snake oil salesman tactics acceptable. In either case scenario Toyota offers a good product by the messengers taint the contents of the message. Yesthe fact is the rebate is Taxable in NYS and other states as well. The rebate is suppose to be an incentive to purchase the car. At Toyota the rebate is like the fish and the bait. Once you get into the Finance & Insurance guy or gal hold your pocket cause they are going to make up the difference in savings you fought hard to achieve. If you got a good deal or close to a good deal according to edmunds TMV look out.. Here comes the extended warranty or the car alarm or the orange and apple accessories design to squeeze every last cent out of ya..So perhaps you did not get the messenger or you just don't understand. Go figure!

landru2 · August 2003

So the F&I guy is trying to sell you stuff because you got a rebate from Toyota? Okay.

CarMan@Edmunds · August 2003

Lay2, I am really sorry to hear about your negative experience, but dealerships trying to make extra profit on the back ends of deals to make up for the fact that many consumers pay little profit on the actual sale of vehicles definitely is not a practice that is limited to Toyota dealers. Most dealers try to make some money in their F&I departments by selling extended warranties, marking up financing rates, etc... Dealerships exist to make money. That is why it is important for consumers to research the product that they are interested in purchasing fully, including whether they want to buy an extended warranty for it, how much this warranty should cost, what sort of interest rate they can qualify for, etc... prior to negotiating with dealers. It is true that Toyota seems to have a few more bad dealers than some other brands, but there is nothing illegal about making a profit on the back ends of deals.

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masspector · August 2003

Being a bigot isn't illegal either, but it is not the type of person that I would strive to be.

This is not a slam on you or your post, but businesses hiding behind the veil of "it's not illegal", is weak to the extreme. Your post seems to cover legit operations, but some businesses take this is not illegal a step too far. Remember, Enron? I think we all have a pretty good idea of what is right and what is wrong. Being deceptive or not telling the whole truth in a car deal is probably not illegal, but it is, well, deceptive.

matherson · August 2003

I got a good deal on my Camry last month.
Used the dealerships financing because it was cheaper than my credit union, plus I had one stop shopping.
Politely declined an over priced alarm, over priced extended warranty and anything else that came up.
The F&I guy at Clair in Boston respected my decisions, and didn't try to oversell. Very easy to deal with. I would recommend.

As long as you are firm, they can't make you buy something you don't want, can they?

CarMan@Edmunds · August 2003

Masspector, a business legitimately making money on the sale of an extended warranty or by facilitating a loan is hardly comparable to bigotry. To compare a business transaction to racism is in poor taste. Real estate agents make thousands of dollars on the sale of homes, boat dealers make thousands of dollars on the sale of boats, banks make money by charging consumers interest on loans...businesses exist to make money. As long as consumers research the vehicle that they are interested in and know what sort of interest rate to expect they can not be taken advantage of when purchasing a new car or truck. No one is holding a gun to consumers' heads when then are at dealers. If they feel as though they are being taken advantage of or that their dealer is making too much money off of them during a transaction they are free to leave at any time. This is beginning to stray from the original intention of my post. What I was trying to say that it is silly to link the fact that Toyota is providing a consumer rebate on a particular model to the fact that this particular dealership is trying to make money on the back end of this deal. The majority of dealers do this on most vehicles that they sell, regardless of the incentives that their manufacturers are providing.

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rivertown · August 2003

The presence (prevalence, IMO) of deceit and manipulation in car sales is just offensive, whether it's legal or not and whether it's profit motivated or not and whether it exploits one aspect of the market place (rebates) or not.

For the buyer, getting so bent about the manipulation and deceit that he can't deal with it effectively is understandable but is also counter productive.

masspector · August 2003

I thought your post above was pretty good and straight forward, that is why I commented to that effect in my post. I agree it is extreme to compare racism and a business deal, but that is the beginning of the slippery slope that leads to problems. I doubt anyone at enron or worldcom woke up and decided to cook the books. I am sure that it was a gradual process that started by covering up one little lie with another until it blew up. Some dealers like to use deceptive sales practices. We should all work at putting those kinds of dealers out of business.

You said "What I was trying to say that it is silly to link the fact that Toyota is providing a consumer rebate on a particular model to the fact that this particular dealership is trying to make money on the back end of this deal."

It may seem silly to you, but it was not too silly to the poster. And there are many more like him trying to buy cars. You are somewhat of a car pro, you know the ins and outs. But alot of buyers do not. They only see the dealer trying to be greedy and get a little more of their hard earned money. The mere fact of the post testifies to that.

uga91 · September 2003

IS YOURS! It is your money until you assign it over to the dealer at delivery. The rebate should come off the bottom line after everything else has been added up (taxes, fees, everything). You subtract the rebate off the bottom line like it was cash out of your pocket. The rebate does not belong to the dealer--it belongs to you. It is your money you are putting down on the car. The rebate does not affect the sales tax paid on the car because it is deducted off the bottom line figure. You can, if you really want to, keep the rebate and have the manufacturer cut you a check instead of taking it off the price of the car. Now, if it's Down Payment Assistance (like Saturn uses) then that money is not yours and must go toward the purchase of the vehicle.

landru2 · September 2003

If the rebate is "your money you are putting down on the car", then why wouldn't you pay tax on it like any other money you put down?

If you buy a $20,000 car and put $10,000 down you pay tax on the $20,000 selling price. You pay the same tax as someone that only puts $1,000 down.

So, if you buy a $20,000 car and put your $1,000 rebate down, you still pay tax on the $20,000 selling price.

masspector · September 2003

UGA91 is saying the same thing you are.

He said "The rebate should come off the bottom line after everything else has been added up (taxes, fees, everything)." This implies paying the full taxes and then taking the rebate off as down payment.

zueslewis · September 2003

is treated just like a discount - after the rebate, you have the bottom line price that you pay taxes on - there's no reason you should be taxed on the rebate - it's not part of the selling price. It's a discount, just from the manufacturer, not the dealer.

uga91 · September 2003

but in Georgia, the rebate gets subtracted off the bottom of the retail contract. Here, you take the selling price of the car, add fees, add taxes, come up with the total--then subtract the rebate to get the balance due. The taxes come from the price of the car. If it's a $20,000 car, you pay sales tax on $20,000, then subtract the rebate from the total.

landru2 · September 2003

You're right. I misread his statement that the rebate doesn't affect the taxes paid.

Zues,
If the rebate is the type that gives the customer the option of receiving a check from the manufacturer then the taxes would have to be based on the pre-rebate selling price. Otherwise, someone using the rebate as downpayment will pay less tax than someone taking the rebate as a check. And while tax rules may vary, I would be surprised if any jurisdiction gave buyers a tax break for having a downpayment.

zueslewis · September 2003

a rebate is just like getting a discount. It effects the bottom line - the bottom line is what you're taxed on, in most cases.

uga91 · September 2003

Here, you are taxed on the selling price of the car. Taxes and fees are added to the selling price of the car and then the rebate is subtracted from that figure. I may not have any experience in the car sales business; but, my wife and I have bought 11 cars in the last 12 years, so I'm pretty well versed on how it works around here.

zueslewis · September 2003

are different - most apply the rebate as a discount and you're not taxed, some don't.

At least it doesn't cost you too much. Of course, you could sign the rebate over to the dealer and have them over-allow on your trade....

KCRam · September 2003

Z, the reason states tax the selling price is because a rebate is a separate transaction from the purchase of the vehicle. The manufacturer is giving the customer money (say $1000), but the manufacturer is not a party to the vehicle purchase. What the customer does with that money is entirely up to them - they can opt to keep it and not apply it to the vehicle purchase. There are some states that even require rebates over a certain amount to be reported as income - a $4000 rebate can certainly change your tax bracket.

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zueslewis · September 2003

I'm speaking generally - and in my experience, more states do not tax the rebate than do.

otoluva · September 2003

Hi carman,

I'm just wondering if there is any car manufacturer offering special financing and cash incentives combind.

Thank you

montanafan · September 2003

Many GM models offer a rebate or a rate or a combo of both. Of course in the combo the rebate is less and the rate is more. Example 2003 Pontiac Vibe. $2,000 rebate or 0.0% to 60m or $1,500 and 2.9%-36M/3.9%-48M/4.9%-60M. I bet other manufacturers offer combos, but to reduce confussion they leave it to the dealers to present the details. I think you could find details in the Edmunds incentive pages of the car/truck you are interested in.

jaydoll · September 2003

I am being offered a 03 Camery Le 4 cylinder/auto with ABS and the JBL audio upgrade (retail of $21,134) for $17600 after rebate. Sound like a good deal?

Thanks,

J

CarMan@Edmunds · September 2003

Hi otoluva. Yes, many manufacturers do allow consumers to combine cash incentives with their special financing programs. In the past when this combination of incentives was offered, the consumer cash allowance was slightly lower than the cash allowance for consumers who pay cash or finance on their own and the special financing rates were a little higher than those for consumers who do not take advantage of any cash incentives. This is still basically the case, but now some automakers are offering consumers what is known as bonus cash that may be combined with their lowest special financing rates. GM, Ford, and DaimlerChrysler are the three companies that offer cash plus special financing rates on the most models. What cars or trucks are you interested in? If you let me know, I would be more than happy to give you a detailed explanation of their incentives and let you know if cash incentives can be combined with special financing rates on them.

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CarMan@Edmunds · September 2003

The exact rules for the taxation of new vehicles vary from state to state, however in general consumer cash incentives are treated as down payments by the buyer and are taxable. On the other hand, dealer cash incentives are treated as manufacturer price reductions and are not taxed. This is how it usually works.

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CarMan@Edmunds · September 2003

Hi jaydoll. I have a feeling that you will get much better feedback on the offer that you've been made by posting this message in the Toyota Camry: Prices Paid & Buying Experience and the Toyota Camry (Sedans Board) discussions.

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otoluva · September 2003

The Impalas are being discounted almost $5 grand off MSRP (rebates+dealer discounts) so can I get all of that and still get GM's 0% for 60 months?

Many thanks

CarMan@Edmunds · September 2003

Otoluva, General Motors' incentives vary depending upon what part of the country one purchases in. I believe that you live in its Northeast region. In this area, GM is providing $4,000 consumer cash OR 0.0% special financing for up to 60 mo. and 1.9% for 72 mo. on the 2003 Chevrolet Impala. These programs may NOT be combined. On the '04 version of this car there is $2,000 consumer cash OR 0.0% special financing for up to 36 months, 1.9% for 48 months, 2.9% for 60 months, and 3.9% for 72 months. The 2004 model has a second set of incentives though that allows the combination of cash and special financing rates. This offer provides $1,000 consumer cash AND 3.9% financing for up to 36 months, 4.9% for 48 to 60 months, and 5.9% for 72 months.

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franklj · October 2003

Volvo is offering a Marketing Support of $3000, which is a manufacturing to dealer price reduction. We're trying to negotiate the deal by using the TMV # minus the $3000, but the dealer won't budge and has quoted 5% above invoice (minus the $3000). Does the $3000 cut into their profit? Here's the deal-
Edmunds #'s: MSRP $44,915;Invoice $42,244;TMV $41,594.

The dealer will not budge below $44,408.70 (5% of the invoice) minus $3000. With the marketing support is it unrealistic for them to sell close to the TMV and still deduct the $3000?

lancerfixer · October 2003

Sounds like they've priced it right around TMV. What's wrong, again? You want it for $38,594? I don't think that's gonna happen. Which model is this? If it's an XC90 or an R model, they're pretty hot sellers, and I wouldn't expect them to budge much on those.

mitsu6 · October 2003

When you are talking about rebate on vehicles this is the following:
Price of Car: $26500
Rebate: (+) 1000
Total: 27500
(
First two lines plus tax and miscellaneous fees
Now further down the Rebate gets taking off (-)
because you pay taxes on rebates.But this is the trick (I think) why they have to put it twice and just only once, after all you are taxed!

mitsu6 · October 2003

Dealers have Rebate forms in which there are two choices. One is to apply towards the new vehicle.The other one is for the customer to receive the rebate. ;(

masspector · October 2003

I have heard of wat you are talking about with having the rebate added in and then subtracted out, but that is not the way it s done in GA, just like uga91 said above. Here, which is the only state that I can speak of experience, You negotiae a price for the car. They then add fees and then tax is calcilated. Then the rebate is subtracted from the grand total. In my last purchase my car plus TTL was 23,500 OTD. They then subtracted 1K rebate so my OTD was 22,500, minus my down payment.

masspector · October 2003

You do not mention which model, but I see a few options for you. I doubt it is a hot model if there is 3K marketing support. I thought edmunds says that TMV does not account for any rebates or incentives so you would be correct in expecting TMV minus 3K. You can check carsdirect.com. That will give you an idea if the price you are wanting is realistic in your area. It may not be as low as you want but should be in the ballpark. CD usually prices with incentives included in the price, but sometimes not all of the incentive.

Another option, if you are not in a hurry for the car is overseas delivery. The pricing is usully 10% off MSRP. Not sure if the incentive would apply too. This may be a little harder to make happen as a lot of volvo dealers are not well versed in the process.

zueslewis · October 2003

I thinnk we have another, even less informed, rivertown on our hands.

landru2 · October 2003

Mitsu appears to know just enough to be dangerous. :^)

Change the first line of his explanation in #37 to:

ADVERTISED price of car: $26500.

and it all makes sense. Since advertised prices always are with the rebate deducted it makes sense in this situation to add the rebate back in order to get the correct taxes and then deduct it to get the correct total.

bradybunch1 · October 2003

I just recently bought a 2004 Rendezvous getting a $2,000 rebate. Three days later, GM offered an additional $1,000 bonus cash. Is there any way for me to take advantage of this extra bonus cash now? Thanks. Billy

tblazer503 · October 2003

sorry. can't hurt to ask the dealer, though.

franklj · October 2003

The model is the C70 HPT, but we are now considering the C70 LPT. To lancerfixer: The price they quoted is just below sticker price 44,408 vs. 44,915. That's only $500 off sticker and it doesn't seem like it's a good deal to me. In any event, the salesguy was pretty pompous so if we do decide to go with the LPT, we're calling the sales manager because I don't want to deal with this other guy. Unfortunately, Volvo dealers are far and few between in my area.

mitsu6 · October 2003

Thanks for the complement :^) (offense no taken)
Well I guess since everybody around here seems to be an expert. Please give advise, and don't criticize. If we have zue in the forum perhaps he may have the right answer for the right question<>

masspector · October 2003

this is what CD shows for the 2003 HT model in GA with no options. You would have to add the invoice price of the options to this price. They have added $300 to the invoice price for ad fees.

Target Price: $37,783
MSRP Price: $42,565
Invoice Price: $40,383

Notice that they have only given you $2300 of the 3K incentive, like I mentioned above.

The real price should be:
Invoice--$40,083
Target---$37,083

Hope this helps.

lancerfixer · October 2003

I thought you said it was their quoted price minus $3,000, which would have put it right around TMV. Am I missing something?
Regardless, these aren't super-hot selling models (in fact, this is their last year of production) so you should be able to get a good deal.

bradybunch1 · October 2003

franklj · October 2003

clpurnell · October 2003

I would like to start a general discussion where we could get up to date information on rebates and Special APR's and also what the standard finance rates are for captive finance companies.

My first question to dealrs and Car_Man would be is there any special APR's on the new Pathfinder Armada and What credit tiers does it apply to. If no special APR's any I dea what the buy rate is right now for the above vehicle.

clpurnell · October 2003

I am in texas if that makes a difference.

CarMan@Edmunds · October 2003

Hi clpurnell. Edmunds.com provides consumers with information on the current incentives programs that are going on in the automotive industry. Click on the following link to check that section of this site out: Edmunds.com Incentives Page. If you have any questions on a program that is listed in that area or would like to double check the validity of the information that you find there I would be more than happy to answer any questions that you have.

As far as the Nissan Pathfinder Armada goes, Nissan is not currently providing any lease, special financing, or cash incentives on it. This is not surprising given the fact that most brand new models remain unsupported for at least the first couple of months that they are on sale (with the exception of certain domestic products lately). Nissan Motor Acceptance Corp.'s standard financing rates vary by region. I do not know exactly what its current standard rate is for your area, but in general NMAC's standard rate is either slightly above or slightly below 4.0% in most areas. This rate is for consumers who qualify for its top credit tier. You need a credit score of over 700 do do so.

Please let me know if you have any questions on this model's or any other model's programs.

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landru2 · October 2003

Here's some advice: grow a thicker skin. Or you won't last long in the car business.

And yes, these boards do contain many experts. Some even know something about the car business. You will learn a lot by listening to them.

zueslewis · October 2003

Rebates, Incentives, APRs - Questions & Comments

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