Rebate Option

AAA

DEFINITION of 'Rebate Option'

An offer to consumers for a cash discount on the purchase of a consumer good. The rebate option may also be called "cash back", though the consumer will not actually receive cash in hand - the "cash back" is used to directly reduce the purchase price. The rebate option is one of two common choices consumers can make when negotiating a price; the other choice is a reduced interest rate. Dealers offer these options as incentives to entice people to buy.

INVESTOPEDIA EXPLAINS 'Rebate Option'

Customers who are financing a product will need to decide between the two choices. While the rebate option makes the most sense for cash buyers, on a loan, the principal and interest both affect the monthly payment, so the buyer who is financing should consider what the monthly payment will be under both options, and what the total cost will be during the time he plans to own the vehicle.



RELATED TERMS
  1. Cash For Clunkers

    A program that allows car owners to trade in their old, less ...
  2. American Option

    An option that can be exercised anytime during its life. American ...
  3. Auto Sales

    The major producers of domestic automobiles report sales monthly. ...
  4. Index Option

    A financial derivative that gives the holder the right, but not ...
  5. Lookback Option

    An exotic option that allows investors to "look back" at the ...
  6. Option

    A financial derivative that represents a contract sold by one ...
Related Articles
  1. Budgeting

    12 Car Insurance Cost-Cutters

  2. Home & Auto

    Did You Buy A Lemon?

  3. Home & Auto

    Used Car Shopping: How To Avoid A Lemon

  4. Home & Auto

    Wheels Of A Future Fortune

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center