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To tune-up your negotiating power with car dealerships, understanding the difference between a customer's incentive and a dealer's incentive may impact what transpires at the bargaining table.
A customer incentive is offered directly to the buyer from the manufacturer. Customer incentives may include the following special offers:
- Cash-back rebates
- Low-interest financing
- Other car buying perks
On the contrary, dealer incentives are factory-to-dealer offers designated to move more cars, serve as a sales incentive or lower the car dealership's actual cost to purchase the automobile from the factory. Regionally, manufacturers extend these incentives, referred to as ‘spiffs' to generate revenue on specific vehicle models.
Unlike a customer incentive where the consumer is entitled to an incentive (if offered), car dealerships are not required to pass on any discounts or rebates to their car buyers. For the automobile consumer, acquiring a dealer incentive may require a little negotiation muscle.