Softer, gentler car incentives

NEW YORK (CNNMoney.com) -- If you're shopping for a car these days, you might wonder, "Where have all those massive cash rebates gone?"

You probably won't be seeing them any time soon, but don't despair, other deals are out there.

Instead of up-front wads of cash to lure you into dealerships, you'll find more subtle incentives that could save you as much money, or almost as much, while better protecting your investment.

Toyota Motor Co. recently announced a massive 0% financing incentive, along with ultra-low lease rates on some popular models. General Motors, Chrysler and Ford have also announced similar programs on popular models.

Chrysler, in addition, is offering no-cost upgrades on some models. For instance, you can get a Hemi engine in a Ram truck, all-wheel-drive in a Chrysler 300 or $2,000 worth of Mopar performance parts and accessories when you buy a Dodge Challenger.

Toyota is offering current Toyota owners two years worth of free scheduled maintenance.

Still, cash rebates are out there for many car models, they're just smaller and more targeted. The problem with big, heavily advertised cash rebates, from the consumer's standpoint, is that they have a corrosive effect on resale values. The clear implication is that the cars aren't worth the price, so dealers have to pay people to buy them -- and that impression lasts.

"You're going to get crushed on your residual value three years down the road," said James Bell, executive market analyst with Kelley Blue Book.

That kind of brand damage is also bad for the carmaker. Its customers become conditioned to waiting for big cash rebates.

Now, after last year's bankruptcy's by General Motors and Chrysler, all automakers seem to be avoiding incentive programs centered around big rebates.

They're better able to do that now, experts say, because they've done a better job of reining in production to meet actual demand.

Incentives like 0% financing also cost automakers less than rebates. For one thing, while every customer qualifies for the rebate, not every customer can get 0% financing. It's restricted to "qualified buyers."

It's getting easier for automakers' financing partners to provide these sorts of deals as the economy slowly improves, said Jeff Schuster, an analyst with J.D. Power and Associates.

"Credit markets are improving," he said. "They're certainly not where they were a couple of years ago but they are greatly improving."

Even customers with less-than-spotless credit can still save money thanks to these programs.

Generally, even those who don't qualify for the 0% deals can get a lower interest rate than they would otherwise qualify for.

"You might be able to get 2.9%, which isn't free money but it's still a pretty good rate," said Jeff Bartlett who writes about auto buying for Consumer Reports magazine.

Low interest rates on financing also translate into low-payment lease deals, another sort of incentive that's usually offered at the same time.

Another hidden incentive that consumers should be aware of are dealer cash incentives. These are rebates that go only to dealers and that aren't advertised to the public. The purpose is to give the dealer more negotiating room without waving money in customers' faces.

"You might not realize the dealer is getting a $1,500 rebate," Bartlett said. "You have to dig up that bit of knowledge."

The auto pricing site Truecar.com provides a pricing graph for each car that shows the actual dealer cost, including dealer cash incentives, along with estimate of what most buyers are actually paying for the car.

The question now is whether big dollar rebate incentives are gone for good. In the past, as soon as one major automaker began offering splashy cash rebates, other automakers followed suit to stay competitive.

"Honestly, I think that's going to be the real test," said Schuster.

Money magazine is looking for Detroit families (including people who have recently moved away) who are willing to discuss their finances and are looking for financial advice. If interested, email your contact information to gmannes@moneymail.com.