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Cheap interest rates! Thousands of dollars back! Manufacturers and dealers are pushing these enticing incentives again this season, and, if you're a savvy incentive shopper, you may save a bundle. But be warned: Do it wrong, and you'll throw away those savings and even pay more.

Here's what's really happening when it comes to "cash back" promotions, the most popular incentive.

Rebates: Who gets the money?

Rebates sound so straightforward: Buy this car, for instance, and get $1,000 back. In virtually all cases, the advertisements you see for rebates are real: The manufacturer, not the dealer, promises to send you a check after you've negotiated and bought or leased a particular vehicle. The money, in theory, has nothing to do with the price you may have negotiated on a vehicle.

What should happen. The rebate money reduces what you're actually paying for the vehicle. Let's say you've agreed to pay $10,000 for a car. The manufacturer agrees to send a check directly to your home for $1,000 as a thank you. When the check comes, your total cost for your new wheels is $9,000.

What does happen many times. The rebate money becomes extra profit for the dealer. The dealer convinces you to have the $1,000 rebate check sent directly to the dealership. They offer to give you "credit" for the money on the spot. But they don't really give you credit. For instance, you agree to pay $10,000; they agree to give you "credit" for the $1,000 rebate. You should owe them $9,000, but they draw up paperwork showing you still owe them $10,000. You just lost $1,000. And you generally won't see this trick occur because the sleight-of-hand is hidden in paperwork.

How to prevent theft of your rebate money: Don't make that gift from the manufacturer a part of your negotiations with the dealership. Negotiate your price on the new vehicle as if there is no rebate. And then have the rebate check sent directly to you at home. Never allow the dealership to "apply" it to the amount you owe them.

Will this work? It will work every time! And, believe me, you can be sure that $1,000 savings is real when you receive it in the mail.

Editor's note: Remar Sutton's car-buying tips have been featured on "Good Morning America," "Today," "20/20," "Nightline," and in magazines such as People, Newsweek, and Credit Union Magazine. He's president of the national Consumer Task Force for Automotive Issues. He writes this column exclusively for credit union members.

Copyright 1998 Credit Union National Association Inc. Information subject to change without notice.
For use with members of a single credit union. All other rights reserved.