What’s the difference between a customer rebate and a dealer incentive?
When the supply of vehicles is greater than demand, a manufacturer may offer price reductions in the form of rebates or incentives to help dealers sell them. Rebates are refunds made to customers by the manufacturer. Typically, a customer can choose to have the rebate amount mailed to him or her after the purchase, or the rebate can be signed over to the dealer and immediately deducted from the purchase price of a new vehicle. However, sales tax still applies to the full price of a vehicle, not the price after the rebate has been deducted. Incentives are rebates made to dealers. It is up to the dealer whether or not to apply the amount to a vehicle’s purchase price. Unlike a sale involving a customer rebate, sales tax on a vehicle whose purchase price is reduced by a dealer incentive is calculated on the price after the deduction is made. Because incentives to dealers are not advertised, few customers know their amounts when vehicle shopping. MSN Autos publishes current dealer incentiv
