When a car dealership offers a cash allowance as an incentive, what exactly are the benefits?
It is generally when you trade in or exchange you current car with another, then you get a lot of benefits and cash saving. In my town, car dealers (including used car dealers) offer you with many freebies, incentives and benefits like discounts, free accessories, cash back percentage on the exchanged car and many more priveleges. To understan this better, just gothrough http://www.automotix.net/autoexchange.html and you will get a clear picture of how things work in this scenario.
I am a dealer. The factory will sometimes make a cash incentive available to the customer to sell more vehicles. The sticker price on the car does not change. You can choose to apply the incentive to the purchase price of the car or you can buy the car and get the cash in the form of a check sent to you. The incentive does not cost the dealer anything, it is offered by the factory. For example: you purchase a car with a sticker price of $20,000 from a dealer for $17,800. If the car has a $1000 cash incentive, you can apply the incentive to the down payment of the car or get a check for the incentive after the purchase. Where most confusion comes into play is in advertising. When a dealer advertises a vehicle for a really cheap price it always has any and all cash incentives applied to the price as advertised. Always check the small print at the end of the ad.