I learned that there is a $3,000 factory-to-dealer rebate for the car I plan on buying. How can I use this information when negotiating the price of the vehicle?
A "factory-to-dealer rebate" is free bonus money that the dealership receives from the manufacturer for selling certain cars. Even though the dealership is the one getting the cash, the rebate can be of great value to you.
Let's say, for example, that you negotiate the price of your new car down close to their invoice cost (a very good deal). Because of the rebate, the dealership will still make a hefty $3,000 profit. Using the rebate information, however, you may be able to negotiate the price even lower.
When you are negotiating the price of your new vehicle, be sure to tell them that you know that they are getting that big $3,000 rebate. Then try to negotiate the price to a price below their invoice cost. If you can get the price down to $1,500 or even $2,000 below their invoice cost (an incredible deal for you, but not unreasonable in this situation), the dealership will still make a nice $1,500 to $1,000 profit.
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