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11 Sep 08 Top Keywords You Need to Know Before Car Purchase (2)
Holdback: Holdback is the money that manufacturer help dealers to pay for the interest for cars on their parking lot. Most car makers provide dealers holdback and most of them are from 1%~3%, depending on the car maker.
Rebate: While there are many different kinds of rebates, they can be grouped by the party gives out the rebate and the party receives the rebate. Mostly, you could see three kinds of rebate which are manufacturer-to-dealer, dealer-to-customer and manufacturer-to-customer. Manufacturer-to-dealer rebate and dealer-to-customer rebate are not covered here since manufacturer-to-dealer is covered under “Dealer cash/Market Support/factory incentive”, and dealer-to-customer rebate is just a trick for dealers as they are just giving out discount. The Manufacturer-to-customer rebate is different than other discounts (dealer cash, market support…etc) due to mostly the amount is taxable as the rebate amount is considered as part of the purchase price. For example, if you are purchasing a Toyota Tundra, assuming there is $6000 rebate on this truck, the agreed “selling price” is $25000 you are actually purchasing a $31000 truck and receive the $6000 rebate separately. Therefore, taxable amount is $31000, which costs you $420 more assuming your sales tax rate is 7%, instead of the tax on $25000.
Dealer Cash/Market support/Incentive: These terms are used by several automotive sites to show the money given to dealers if certain model is sold. Mostly, the only criterion is the car must be delivered to customer within a given period. The difference between this category and rebate is since money in this category is passed to dealer directly, the dealer cash amount would not be taxable. Compared with rebate, assuming there is 5000-dollar dealer cash on a car, you are actually saving $5,000assuming dealers pass the whole amount into customers. For the same amount of rebate, you are actually saving a little less as you still need to pay for the sales tax on the $5000. However, since dealer cash/market support/incentive is not listed on invoice signed by car shoppers, dealers are not required to give to customers so it becomes pure profit to dealer. There is no other way to determine if there is dealer cash but to check automotive sites. Even though some websites give you the information, they do not tell you all even they know. The best way for car shoppers is to share information as discussing the strategy to fight in order to get the best deal, and it is the reason Caroricedatabase.com is established.
Tags: Car Buying Tips
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[...] second net is all public car incentives and auto rebates available on the car and model. Use the invoice price of the car and take out the amount of all [...]