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Rebates vs Dealer Cash


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I noticed a dealer advertising a "Customer Cash (Rebate)" in addition to "Dealer Cash". What is the difference between the two? Also, are taxes calculated before or after these discounts subtracted from the purchase price?
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Customer Cash Rebate - Lets say there is a car for sale for $30000, with a $1500 rebate. If you decide to actually buy the car, the purchase price is $30,000, and the manufacturer actually will send a rebate of $1500. As the manufacturer sends the rebate to the dealer, the dealer considers this as part of your downpayment for convenience reasons. I believe you can actually have the manufacturer mail you the $1500 rebate if you so chose.

 

Dealer Cash - If you buy a car for $30000 and there is $1500 dealer cash, you pay $30000, and the manufacturer gives the dealer $1500. The benefit to you in this case is if the dealer knows he is getting $1500 for every car he sells, he should be willing to negotiate the selling price of the car for $1500 less than he normally would, so you could theoretically easily negotiate the selling price of $28500.

 

Regarding taxes - It varies by the state you live in. In CA in a customer cash rebate, you are required to pay taxes on the pre-rebate purchase price (in this case $30,000). In a dealer cash scenario, you pay taxes on what you negotiate the final purchase price of the car to be.

 

Hope that helps.

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Also, the current rebate is $1500 for the LGT, but I think the dealer cash is $500. They don't have to give you the dealer cash and don't even have to mention it. My local dealer included it automatically in my purchase price. I even asked if that's where the extra 500 came from, and he confirmed. The other quotes I got elsewhere did NOT include it, and when I asked if they would, they said "no, sorry."
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In Arizona, you pay tax on the final price, which is minus any rebates or incentives. So, with $1,500 rebate plus $500 dealer cash, you'd pay tax on $28,000 instead of $30,000 because your purchase price is $28,000.

 

They get you any way they can in California, eh?!

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In CO you paid tax on the rebate too. Like the previous post says the dealer/State consider it as part of your down payment. On the other hand in CO you don't pay tax on your trade-in value, while in CA you do.

 

Warrtalon - did you end up buying your wagon from Heuberger?

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Warrtalon - did you end up buying your wagon from Heuberger?

 

No, they only had a red one, and my wife doesn't want red. They didn't put much effort into sourcing me a black one from elsewhere, and they wouldn't give me anywhere near the TRADE-IN value of my Lexus. All I wanted was trade-in value, but they offered way less. A little less would have been fine, but this was 4k below NADA value...

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