Cash Back or Low Interest Calculator
Compare cash back rebates vs. low interest financing for auto purchases
Cash Rebate vs. Low Interest Financing
Auto manufacturers may offer either a cash back rebate or a low interest rate with a car purchase. Very often, these offers are mutually exclusive. Use the calculator to find out which of the two is the better offer.
Cash Rebate
A vehicle cash rebate is an additional deduction on the purchase price of a car. The amounts generally range between a few hundred to a few thousand dollars. In some cases, the rebate is large enough to cover the entire down payment.
Several states do not tax cash rebates: Alaska, Arizona, Delaware, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New Hampshire, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas, Utah, Vermont, and Wyoming.
Low-Interest Financing
When car buyers receive more favorable interest rates than usual on their car purchases, this is called low-interest financing. A car loan at a lower rate will require the car buyer to pay less in interest during the life of the loan. Normally, car buyers must have excellent credit scores to qualify.
Which One to Choose?
Both options reduce the total cost of owning a car, just by different methods. Generally, it comes down to which amount is higher: the rebate amount or the total interest saved from the low introductory rate. The calculator can help determine which option will result in higher savings.
Considerations
- Shop around at external sources such as banks, credit unions, and online auto loan companies
- Be aware of underwater/upside-down loans when financing for long terms
- Rebates come from manufacturers, not dealers - the final price is still negotiable
- Watch for bait-and-switch tactics where advertised deals may not be available to all buyers