Cash Back Vs Low Interest Calculator
Compare a cash rebate vs low-interest dealer financing on a car purchase.
Vehicle Information
Auto Financing Tips
- • Get pre-approved from multiple lenders for comparison
- • Negotiate the vehicle price separately from financing
- • Consider certified pre-owned for better rates
- • Factor in insurance cost differences between new/used
- • Don't extend loan terms just to lower monthly payments
Recommendation
Choose Low Interest
Total savings (3.7%)
Cash Back Payment
6.9% APR
Low Interest Payment
1.9% APR
Total Cost Comparison
Indigo marks the cheaper option over the full loan term.
Investment Opportunity
From investing $2,000.00
Cost Breakdown
Recommendations
Financial Analysis
Based on your inputs, the low interest option saves you $1450 over the life of the loan (3.7% savings). The cash back option provides $2000 upfront but costs $4826 in interest at 6.9% APR. The low interest option saves $-3450 in interest charges with its 1.9% APR rate.
🚗 Important Considerations
- • This analysis assumes you'll actually invest the cash back
- • Investment returns are not guaranteed
- • Consider your risk tolerance and investment discipline
- • Factor in opportunity cost of monthly payment differences
- • Verify all rates and terms with actual lenders
How it works
When buying a car, dealers often offer a choice: a cash rebate or a lower financing rate. This calculator compares them by computing the total cost each way — the rebate lowers the amount financed, while the low rate lowers the interest — and shows which saves more.
Compare the two offers
Option A: finance (price − rebate) at market rate Option B: finance price at the low promo rate
- rebate
- cash taken off the price
- promo rate
- the reduced financing rate
Worked example
- $30,000 car, 5-year loan
- Option A: $2,000 rebate at 6%
- Option B: 0.9% financing, no rebate
- Compute total of payments for each
- Compare the totals
The rebate usually wins on shorter loans; the low rate wins on longer ones or large balances.
Good to know
- The rebate is better when the financed amount or term is small; the low rate wins as both grow.
- Taking the rebate and financing elsewhere (credit union) can sometimes beat both.
- Always compare total cost, not just the monthly payment.
Related Calculators
Frequently Asked Questions
What does this calculator compare?
The two common dealer incentives: a cash rebate (taken off the price, financed at a normal market rate) versus low promotional financing such as 0.9% or 0% APR with no rebate. It computes the total cost of each path so you can pick the cheaper one.
When is the cash rebate the better deal?
When the amount financed is small or the loan is short — there is less interest for the promo rate to save, so the up-front price cut wins. A large down payment or trade-in tilts the math further toward taking the cash.
When is low-interest financing better?
On larger balances and longer terms, where interest at a market rate would exceed the rebate. Financing $30,000 over 6 years, the gap between 0% and a 7% market rate is several thousand dollars — usually more than a typical rebate.
Can I take both the rebate and the promotional rate?
Usually not — dealers typically make you choose. One often-overlooked option: take the rebate and finance through a credit union or bank at a competitive rate, which can beat both dealer offers if your outside rate is low.
How do I compare the two offers correctly?
Always compare the total of all payments plus any down payment for each option — never just the monthly payment, which a longer term can make look artificially cheap. Identical terms and down payments make the comparison apples-to-apples.