Quiz: How Car Rebates and Incentives Work

By: Staff

4 Min Quiz

Image: refer to hsw

About This Quiz

Navigating through different car rebates and incentives can be tricky. How knowledgeable are you when it comes to car rebates and incentives? Take this quiz and find out!

True or False? Car dealers typically offer coupons in an effort to encourage people to purchase cars.

While retailers like the grocery or department store may offer sales or coupons, automakers and dealers tend to discount their merchandise through rebates and incentives. Car rebates and incentives are programs that stimulate sales for car makers by giving savings to consumers.

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True or False? There are two main types of incentives offered to consumers when purchasing a car: cash rebates and low-interest financing.

There are three main types of car rebates and incentives offered to consumers: cash rebates, low-interest financing and special leases.

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Which of the following statements is true?

If you know how consumer rebates and incentives work, you can also use that information to find the best deal. For example, since you know now that car makers use incentives to increase sales, it's easy to see that brands with slow sales tend to offer the best incentives to consumers. So, if a car maker is having a good sales month or year (and if you want to save money), you may want to shop a competitor that's in a bit of a sales slump -- chances are they're offering better discounts.

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True or False? One of the most popular types of incentives that car makers offer are new car rebates.

One of the most popular types of incentives that car makers offer are new car rebates. New car rebates are those popular cash back offers that you've probably heard being advertised: Buy a car and get cash-back. The rebate amounts can range from a few hundred to several thousand dollars.

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True or False? New car rebates are paid in cash as a one-lump sum to purchasers.

Most people don't walk out of the dealership with the keys to a new car and several thousand dollars of the dealer's money in his or her pocket (not legally, anyway). Instead, the rebate is applied to the cost of the new car.

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True or False? Rebates are more common with used cars than new cars.

While rebates on new cars are common, and tend to come from the car maker itself, you can also get rebates on used cars. These tend to be less common, and the money for the rebate is coming from the dealer, not the car maker. Still, the effect is the same for you: money saved off the price of a new (used) car.

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Which of the following statements is true?

Used car rebates tend to be smaller than new car rebates. Still, since you save so much buying a used car over a new one, getting a used car with a smaller rebate often makes more financial sense than getting a new car, no matter how hefty the new car rebate is.

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True or False? Sometimes the government offers a rebate for buying a car.

Sometimes the government offers a rebate for buying a car. Even when it's the government offering the rebate, the reason and the effect is the same: The government wants to increase sales of a particular model and consumers save money in the process.

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True or False? Currently, the government is not offering any automotive rebates.

Currently, the government offers rebates to some consumers who buy hybrid and alternative fuel cars. The rebates are given because the government wants to encourage people to buy this form of technology. The idea is that if more people drove hybrid or alternative fuel cars, the country would use less gas and we'd ultimately have less air pollution too.

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True or False? Rebates are the only way to save money when buying a car.

Rebates aren't the only way to save money when buying a car. Car makers and dealers offer lots of new car incentives beyond rebates. One of the most common offerings is low-interest financing. When low-interest financing is an option, that means that dealers and manufacturers have partnered with lenders to offer special loans to buyers of a particular vehicle. Many times, those loans are for zero-percent interest.

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