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What is Carryover Allowance?

Carryover allowance is a special incentive given to dealers from the manufacturer to help clear out year-end models.

It usually goes into effect whenever the next year's models start arriving in showrooms. Manufacturers don't want the leftover models competing with the newer ones, so they offer dealers an added bonus to sell them - usually 2 to 4% of the invoice price of the vehicle.

New models usually begin arriving in August and it's common to see end-of-model year clearance sales start to pick up in September/October.

Carryover allowance is an added bonus on top of any other hidden incentives that may be provided by the manufacturer to help clear out slow-selling models. Not all manufacturers provide carryover allowance, and most have replaced them instead with larger incentives.

If a dealer does get one, they may not pass the incentive to the consumer. It all depends on how quickly the leftover models are selling. When a dealer has no problem clearing out their lots, they're not going to be motivated to pass on the savings.

But it's always good to know these hidden discounts and kickbacks when negotiating, especially if you're trying to buy a leftover model. In most cases, dealers have a lot of room to negotiate. The type of deal you get depends on how well you negotiate coupled with local demand/supply dynamics.

3 Steps Every Car Buyer Needs to Take to Save Maximum Money

The key to getting the best deal is to gather price or lease bids from as many local dealers as possible. Then shop that best price around until no one can beat it. Here are the steps:

Step 1 Get Prices From My Trusted Network

Select the vehicle you're interested in to see if there are local dealers in my network who will provide you with their best upfront price. You will get direct access to an internet sales manager who you can further negotiate with online (no need to visit dealership).
Select Vehicle to Get Local Pricing

Step 2 Get Prices From TrueCar / CarsDirect

TrueCar, and CarsDirect are my top 2 online price quote recommendations. These services show you pre-negotiated prices from dealers closest to you - and the deals are usually pretty decent. But remember, you can still negotiate further.

Step 3 Complete my Checklist

Follow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan

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About The Author

Gregg Fidan Gregg Fidan is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.
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