Understanding Incentives When Shopping for a New Car

The market for new vehicles suffered in 2020, declining by about 15.5 percent in the United States alone. While the industry has slowly recovered, the pandemic caused massive changes. More car dealerships have moved their operations online, and brands are promoting aggressive incentive packages to move last year’s stock.

Those factors have created great conditions for buyers. If you’re looking for a new vehicle this year, incentive programs may help you find a deal, but you’ll need to compare carefully to make an informed decision.

Current incentive offers for new vehicles include:

• 0% APR Financing- Many brands offer special financing periods for new vehicles. You’ll pay no interest for the first months of vehicle ownership; in some cases, drivers don’t have to pay interest for upwards of 60 months. When evaluating these incentives, make sure you know the APR that you’ll pay after the special financing period ends. If you’re planning on paying off the car within the period, you can save thousands of dollars by avoiding interest.
• Cash-Back Offers- A cash-back program reduces the cost of the vehicle. That doesn’t mean you’ll leave the dealership with thousands of dollars in your pocket — most cash-back offers affect the sticker price of the car. Some brands are offering hefty cash-back programs in 2021 as incentives for drivers, but you’ll need to compare these incentives carefully to determine their value. If you’re financing, a lower APR might provide more savings over time than a lower sticker price.
• Price-Match Guarantees- Some independent dealerships will match the prices of their competitors. While new vehicles have set pricing, you can still negotiate in many circumstances, so you’ll need to research the competition to spot the best deals.

By learning about the market — and looking at vehicles from a variety of manufacturers — you can take advantage of the unprecedented market for new cars. Online resources can make that research much easier.

Comparing New Cars by Shopping Online

National shelter-in-place orders forced many dealerships to move their businesses online — and while virtual shopping isn’t great for dealers, it’s an excellent tool for drivers. With a few clicks, you can find information about pricing, incentives, and financing. Many sites also offer test drive services and contact-free car deliveries.

Before you start scheduling test drives, you’ll need to learn as much as possible about local options. That means using online resources to find advertisements from area dealers. Visit as many as you can, even if you’re confident you’ll choose a certain brand; by learning about deals in your city, you can negotiate more effectively.

Some quick tips for starting your search:

• Set your goals. Rather than looking for a certain brand’s SUV, consider the features that are important to you. The new car market is extremely competitive, and you’ll likely find several models with nearly identical features. By comparing cars between brands, you’re improving your chances of finding a low price.
• Keep notes. Write down information about available incentives, pricing, and car features. Detailed notes will make cost comparison much easier.
• Be ready to negotiate. Manufacturers set the MSRPs for new vehicles, but independent dealerships may be able to offer better pricing. If you know the retail prices of similar vehicles, you can negotiate more effectively.

Finally, cast a wide net. Consider previous-year models — they’re still brand-new, after all, and many 2021 models are virtually identical to 2020 cars. The more vehicles you consider, the better your chances of finding a bargain.

Drivers Should Research Options Online Before Buying

Car dealerships don’t offer their best deals to every buyer, and you’ll need to do extensive research to make sure you’re getting a bargain. Fortunately, the internet provides the tools that drivers need to find brand-new vehicles with excellent incentives.

Start by researching at least 3-4 dealerships. Compare models between brands, looking closely at features, and keep notes about available incentives. Remember to do the math — you’ll need to determine exactly what you’ll pay, particularly if you’re financing your purchase through a loan. Understand how incentives work and read the fine print.

By shopping online, you can compare the true costs of vehicles easily. While you’ll need to do a little bit of legwork, you’ll spend much less time browsing websites than you might spend going from one physical dealership to the next. Best of all: When you’re ready to make a purchase, you’ll get peace of mind from knowing that you’ve paid a fair price.