Cash Back or Low Interest Calculator
Decide between a rebate and a low interest rate.
Two offers, one choice
Car makers often offer either a cash rebate or a very low interest rate, but not both. The rebate cuts the amount you borrow. The low rate cuts the interest you pay. Which wins depends on the size of the rebate, your own loan rate and the term.
Example
On a 30,000 car with a 2,000 rebate at your own rate of 6.5%, the payment is about 547.85 and you pay about 32,871 in total. The 1.9% special rate costs about 524.52 a month and about 31,471 in total, so here the low rate saves about 1,400.
If you can pay cash or get a low rate from your bank, the rebate often wins. If your own rate would be high, the special rate may save more. Always check the real terms, since special rates can require excellent credit.
Frequently asked questions
Does the rebate lower the price I negotiate?
Normally you negotiate the price first, then apply the rebate. Check the fine print of each offer.
What if I pay cash?
Then take the rebate, since there is no interest to save.
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