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If a "rebate" exists for the car you are interested in buying you, must keep the following information clearly in mind:
(1) The "rebate" is NOT in place of a "discount" off of MSRP price but is IN ADDITION TOO the discount off of MSRP price.
When negotiating price with the salesperson ALWAYS KEEP THE REBATE OUT OF THE PICTURE and negotiate as if NO rebate was available! If the salesperson keeps trying to include the rebate amount in the discussion, STERNLY STATE that the rebate will be taken into consideration AFTER the final price has been established and agreed upon.
(2) The WORST way to use a REBATE is to accept a check back AFTER you already agree to a buying price!
(3) The BEST way to use the REBATE is to have it applied toward the final purchase price as a "deposit" and have it deducted from the final amount BEFORE any taxes are computed.
This is VERY IMPORTANT since, if you apply the rebate AFTER taxes are computed, you are LOOSING the full effect of the rebate and are paying taxes on the rebate to boot.
As an example, consider a full size car that has a $1500 rebate applied to it. Say the car has an MSRP of $25,000 and you got a "best" price of ** $20,000 ** (20% off MSRP price), without a trade-in. The rebate amount of $1500 should now be deducted from the $20,000 leaving a final "taxable" amount of $18,500! You should only pay tax on the $18,500 and NOT on the $20,000! If you did pay tax on the full $20,000, the "rebate" would only be worth $1395 instead of $1500 (assuming a 7% tax rate) and you would actually be LOOSING *** $105 *** on the deal.
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