Rebate Option

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.

BREAKING DOWN '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. Stock Loan Rebate

    Interest paid by a stock lender to a borrower who has put up ...
  2. Negative Points

    A cash rebate paid by lenders to a mortgage broker or the borrower ...
  3. Net Cash

    A company's total cash minus total liabilities when discussing ...
  4. Cash Back

    Cash back can refer to two different kinds of card transactions: ...
  5. Option

    A financial derivative that represents a contract sold by one ...
  6. Cash Flow

    The net amount of cash and cash-equivalents moving into and out ...
Related Articles
  1. Personal Finance

    Hidden Costs Of Product Rebates

    These cash incentives lure in consumers, who are often unable to collect on the deal.
  2. Personal Finance

    How Mail-In Rebates Rip You Off

    These common strategies often leave consumers holding the bill.
  3. Trading

    Getting Started In Forex Options

    Stocks are not the only securities underlying options. Learn how to use FOREX options for profit and hedging.
  4. Investing

    Cash: A Call Option With No Expiration Date

    Cash is generally regarded as a drag on investment returns, but sometimes it may be preferable to hold a substantial cash amount instead of investing it in other assets. This is because having ...
  5. Trading

    What Maker-Taker Fees Mean To You

    Exchanges and a few high-frequency traders are being scrutinized for a rebate pricing system regulators believe distorts pricing, diminishes liquidity and can cost long-term investors.
  6. Trading

    Options Basics: What Are Options?

    An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. An option, just like a stock ...
  7. Trading

    Stock Options: What's Price Got To Do With It?

    A thorough understanding of risk is essential in options trading. So is knowing the factors that affect option price.
  8. Investing

    Rent To Own; Own To Rent

    This method can help first-time buyers afford a home using a rent-to-own strategy, and it can also be good for investors.
  9. Investing

    A Newbie's Guide To Reading An Options Chain

    Learning to understand the language of options chains will help you become a more informed trader.
  10. Investing

    Getting Acquainted With Options Trading

    Learn more about stock options, including some basic terminology and the source of profits.
RELATED FAQS
  1. Which economic factors most affect the demand for consumer goods?

    Understand how key economic factors such as inflation, unemployment, interest rates and consumer confidence affect the level ... Read Answer >>
  2. What's the difference between a regular option and an exotic option?

    Before learning about exotic options, you should have a fairly good understanding of regular options. Both types of options ... Read Answer >>
  3. What does high open interest tell you about an option?

    Learn about the open interest of options contracts and what a high and a low open interest indicate about the liquidity of ... Read Answer >>
  4. Do options make more sense during bull or bear markets?

    Understand how options may be used in both bullish and bearish markets, and learn the basics of options pricing and certain ... Read Answer >>
  5. How is cash flow from operating activities calculated?

    Discover why cash flow from operating activities is significant to businesses, and learn the direct and indirect methods ... Read Answer >>
  6. How do government stimuli increase the number of jobs in the private sector?

    Learn how government stimuli increases the number of jobs in the private sector by increasing consumers' purchasing power ... Read Answer >>
Trading Center