Are you in the market for a new car? Auto dealers often offer rebates and incentives to attract buyers, but cash back deals and other promises are sometimes too good to be true. Planning ahead before going to the showroom can help you understand what those deals really mean.

Higher Interest Rates

One way to avoid hidden costs at the dealership is to be savvy about special offers and other incentives. Local dealerships may advertise rebates; however, it's really the manufacturer that offers these rewards. If you do choose to accept a rebate, opt to have it deducted from the vehicle purchase price at the time of sale. If the dealership mails you a rebate check after the sale, you'll have to pay taxes and interest on that cash back.

Early Payoff Penalties

If you have the means, paying off loans ahead of schedule seems like a good thing to do, right? It depends on the fine print. Auto dealers earn interest on car loans, and when buyers repay the full cost ahead of schedule, there can be penalties in the form of fees. It's common for consumers to be presented with a choice: low to zero percent financing or a cash-back reward. While it can be a good idea to opt for the rebate, buyer beware. Before you invest that extra capital to pay off your car loan, be informed about your loan schedule and any payoff penalties.

Don't wait until you're at the dealership to think about financing. Prospective car buyers can secure auto loan preapprovals prior to setting foot in a car lot. When you plan your financing independent of a dealership, you have more control over your money, and there's no hidden agenda.