Message on a car windshield that reads 0% financing for 72 months.

New Car Incentives: The Complete Savings Guide

Explore our comprehensive guide to new car incentives and discover how to unlock the best deals on your next vehicle.

When you’re shopping for a new car, you may run across terms like factory rebates, dealer cash or customer cash back. While these may sound similar, there are various types of incentives that all work differently. It’s a good idea to get familiar with them, as you don’t want to miss out on any potential incentives that could help you save thousands on your next vehicle.

What Are Car Buying Incentives?

Incentives and rebates are programs that encourage new car purchases. These may be offered to the consumers or the dealers by the OEMs. Incentives can also be created by the dealer. All you need to know is that they are intended to help shoppers save money when buying a new car.

Automakers often have sales targets they want to meet, often on a monthly, quarterly and annual basis. This is just one of the reasons why great timing can lead to great deals. When there are incentives for new vehicles, dealerships can use them to move inventory and pass the savings on to car shoppers. To find incentives on the car you’re shopping for, use TrueCar to configure a vehicle and see the latest offers—all in one place.

Types of New Car Incentives

Cash Rebate / Cash Incentive

A cash rebate is an incentive, usually offered by the carmaker, made to lower the overall sale price of the vehicle being purchased. This lower sale price is offered to encourage a shopper to make a deal, right now.

Here’s how a typical cash rebate works: A popular SUV might have an MSRP (Manufacturer’s Suggested Retail Price) of $38,000. If this vehicle had a cash rebate of $3,000 on this vehicle, a shopper could expect the selling price to be reduced by that same $3,000.

Cash rebates are the most common type of new car incentive. It is worth noting that some states will tax the full price of the vehicle before the rebate is applied. Check with your local laws to see if that applies to you.

Dealer Cash Incentives

These incentives are paid to the dealers by the OEMs to encourage sales and the savings are often passed onto the consumer. There are a few variations, such as the OEM giving a cash credit to the dealer once a vehicle is sold or dealers earning cash bonuses after passing certain sales goals. Another common incentive is a dealer receiving a rebate after purchasing a specific model from the manufacturer.

Special Finance and Special Lease Incentives

Special financing incentives pop up throughout the year, usually with offers such as promotional interest rates and finance cash. Popular lease offers include promotional monthly payments, lease cash and even coverage to pay off an early lease termination fee for your current leased vehicle.

Automakers spend lots of advertising dollars promoting special financing and lease incentives, so chances are you’ll see these offers if you spend any time online or watch TV. When you see an ad for a sales event, you can expect incentives when you head to the dealership.

To qualify for special financing and lease incentives, you will almost always need good credit. Keep this in mind if you see an especially attractive offer such as 0.9% APR with no money down. While many shoppers will be approved for financing, only the most creditworthy customers will receive the best offers.

Target Group Incentives—Students, Military and More

Many automakers offer targeted incentives for various groups—for example, college students and those who serve or have recently served in the military—usually in the form of a bonus cash offer. Other groups may also be eligible for these types of incentives, including first responders, teachers, individuals affected by natural disasters and members of specific affiliations such as the Farm Bureau or National Association of Realtors.

Customers who take advantage of these types of incentives may be required to finance or lease through the manufacturer’s in-house financing company—also known as a captive lender. To help sweeten the deal, you may also qualify for promotional interest rates and lease terms. Programs vary between each automaker, so be sure to check the offer terms.

Qualifications for target group incentives vary. College students or recent graduates usually must provide proof of current enrollment or graduation through a diploma, transcript or school registrar letter. Military personnel usually must provide proof of military status and may be able to share their offer with household members. Other groups may need to provide proof of employment or membership.

Loyalty Incentives

As it turns out, loyalty can also be very rewarding. With loyalty incentives, several automakers provide bonus cash to customers who purchase or lease another vehicle of the same make. This is especially important because dealers want to ensure that lessees who return their car to the dealership drive away with another one.

Several automakers provide loyalty incentives for customers who buy or lease their next vehicle from a different make within the same manufacturing group. This can lead to some interesting possibilities, especially if you’re looking for a change in lifestyle. If you own a Fiat, for example, you would qualify for loyalty incentives across other FCA brands, including Chrysler, Jeep, Dodge, Alfa Romeo and Maserati.

To qualify for a loyalty incentive, customers must provide proof of owning or leasing a vehicle from the same make or manufacturer group. Unlike with conquesting, you usually don’t have to trade in your current vehicle to qualify for a loyalty incentive. Keep in mind that not all brands provide loyalty incentives, so check with the dealership first.

Trade-in Incentives

A trade-in incentive provides customers with bonus cash on top of their vehicle’s valuation. This type of incentive can be functionally similar to conquesting, but it does not apply to leasing. There may be more specific requirements on qualifying vehicles, although some automakers will accept any vehicle, including those of the same make.

To qualify for a trade-in incentive, customers must provide proof of owning an eligible vehicle. Eligibility may be restricted by certain model years, makes, models or even body types. And as the name suggests, you will need to trade in your vehicle at the time of purchase.

Conquesting Incentives

People are often loyal to brands they’ve come to trust, which can be a problem for automakers who wish to expand their market share. Automakers use conquesting incentives to entice owners of specific vehicles with bonus cash, often requiring owners to trade in their current vehicle for the competitor.

If you own a segment-leading vehicle like a Toyota Sienna or Honda Odyssey minivan, you may be eligible for conquesting offers from competing automakers. This type of incentive is also common with leasing, as lease customers are often loyal to the same brand for years to come.

To qualify for a conquesting incentive, customers must provide proof of owning or leasing a vehicle from a competing manufacturer. You should be able to find a list of eligible vehicles within the offer’s fine print, although in some cases you may be eligible with any different make. You may need to trade in your eligible vehicle or terminate your eligible lease as part of the offer.

Electric Vehicle Incentives

When you buy a new electric, plug-in hybrid, or fuel-cell electric vehicle, you may be eligible for various federal and local tax credits. Even if you’re leasing the electrified vehicle, the automaker will receive the tax credit, but it’s possible you’ll see some of those savings reflected in the monthly payment.

The electric car tax credit rules changed recently under the Inflation Reduction Act, so be sure to check out the new eligibility requirements. You can also check out specific EV incentives depending on where you live on TrueCar’s EV Incentives hub.

Time of Year Incentives

Oftentimes when shopping for a car, people ask if there is a good or bad time of year to buy a car? The answer is complicated, but time of year does have an impact on new vehicle pricing. Typically, you’ll see incentives to buy new vehicles tied to dealership sales goals – so the end of the month, the end of the quarter, and the end of the year.

Additionally, think about some popular car buying festivals: Lexus’ December to Remember, Happy Honda Days, Ford Truck Month, ToyotaThon… the list goes on! All of these events aim to bring shoppers in on the guise of saving on a brand new vehicle.

Other Special Offers

The cost of owning a car can add up over time, so many automakers also offer warranties and free maintenance to help create a worry-free ownership experience. This can include anything from free oil changes to a 10-year/100,000-mile powertrain limited warranty. These types of incentives are even sometimes available with Certified Pre-Owned Vehicles, which often have their own sales events.

Start Shopping with New Car Incentives

If you’re shopping for a new car, TrueCar’s Build and Price flow has an entire section dedicated to showing you the incentives you’re eligible for on the specific model you’re looking at. Not sure what car you’re looking for yet? That’s okay! You can check out our Deals page, where we list the best deals every month.

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