As car incentives return, here's how to find them and save money

Car incentives nearly vanished during the past several years, thanks to pandemic-driven supply chain issues for auto manufacturers. The good news is that auto incentives, while still below prepandemic levels, are starting to return.

According to Kelley Blue Book, a Cox Automotive company, auto incentives — as a percentage of the average new-vehicle price buyers paid — reached 5.9% in February 2024. That’s compared with a general range of 10% to 11% before COVID-19 hit and 2% in fall 2022.

With inventories returning to normal and some auto manufacturers again sweetening deals to move vehicles, here’s how you can find and possibly save with car incentives.

Be flexible about the vehicle

Traditionally, auto dealers strive to have 60 selling days' worth of cars in stock. As auto production has returned, some manufacturers — like Toyota — remain well below the 60-day mark, while others — including Ford, Nissan and Buick — are overstocked.

"The key right now is to be flexible about which vehicle you consider," says Sean Tucker, senior editor for data company Cox Automotive. "If you had your heart set on something from Toyota, you're probably not going to find a great deal. They just don't have trouble selling cars right now."

Auto manufacturer websites are a good place to research auto deals and incentives — including cash rebates, low-rate financing and lease deals — that are available for various makes and models.

Tucker suggests that incentives for leasing and electric vehicles are both good sources for saving in the current market. Auto dealerships are trying to restore the leasing cycle that feeds the used car market, so many dealerships are offering lease deals.

"It's actually relatively easy right now to get a good lease on an EV," Tucker says. "And that might even be a good idea just from a technology standpoint, because three years from now, when your lease is likely coming up, there may be far better EVs on the market."

Know what incentives you qualify for

. Joseph Yoon, consumer insights analyst at Edmunds, recommends telling the dealer upfront what you expect in the way of incentives.

As part of your research, be aware of the different types of incentives available, because in some cases they can be combined.

• Auto rebates provide a certain dollar amount to reduce your overall cost of buying, financing or leasing a vehicle. The rebate reduction should be on top of any other discount you’ve negotiated.
• Low-rate financing is an incentive offered by automaker captive lenders — although you’ll need to have good or excellent credit to qualify and may be limited on loan length.
• Loyalty incentives may be available if you have a certain car brand and want to buy or lease another one from the same manufacturer. 

Stacking more than one incentive, when possible, can help you take advantage of every dollar available to you.  Use an auto loan calculator to run each scenario and see which will save you the most money in the long run. Also, consider whether taking a cash rebate at the dealer and financing elsewhere could save you even more.

When you buy or lease an EV, stacking manufacturer and other incentives can result in major savings. If you and the vehicle qualify, you can claim the federal EV tax credit of up to $7,500. On top of that, you may find EV incentives from your electric company or state and local governments. The Energy Department's Alternative Fuels Data Center enables users to search and filter by state and utility/private incentives.

About EVs, Yoon says auto manufacturers and dealers are motivated right now to offer savings on top of the federal incentive, because “there's still a little bit of inventory left from 2023 that they really, really, really want to get rid of as the 2024 models [are starting to] hit.”

Finally, if you can find more than one dealership with the vehicle you want, present the deal you expect to each and let them compete for your business.