Auto Loan: Rebate vs. Low Interest Financing Calculator

The Dilemma: Cash Rebate or Low APR?

When buying a new car, manufacturers often entice buyers with special offers. Two common incentives are a cash rebate (money off the price) or low-interest financing (a lower Annual Percentage Rate - APR). Often, you can only choose one.

Which deal is better depends on several factors:

• Rebate Amount: A larger rebate significantly reduces the amount you need to finance.
• Low APR Offer: A very low promotional rate (like 0% or 0.9%) can dramatically reduce the interest paid over the loan term.
• Your Standard Interest Rate: If you take the rebate, you'll likely need financing from another source (like your bank or credit union). The rate you qualify for there is crucial. If it's high, the low APR offer might be more appealing even with a smaller rebate.
• Loan Term: Longer loan terms generally mean more total interest paid, making the lower APR more valuable over time.

How This Calculator Helps

This tool calculates the financial outcome of both scenarios based on your inputs:

1. Taking the Rebate: Calculates the loan based on the reduced vehicle price (Price - Rebate) financed at your standard APR.
2. Taking the Low APR: Calculates the loan based on the full vehicle price financed at the special low APR offered by the manufacturer.

It then compares the **Monthly Payment** and, more importantly, the **Total Amount Paid** for the loan in each scenario to help you identify the financially superior option.

Getting Your Standard APR

To use this calculator effectively, you need a realistic estimate for your "Standard APR". This is the rate you'd likely get if you *didn't* take the manufacturer's special financing. It's highly recommended to get pre-approved for an auto loan from your bank or credit union *before* visiting the dealership. This gives you a concrete rate to use for comparison.

How to Use This Calculator

1. Enter the full Vehicle Price before any incentives.
2. Input the available manufacturer's Cash Rebate Amount.
3. Enter the special Low APR Offer from the manufacturer.
4. Input your expected Standard APR (from your bank/credit union, or an estimate based on your credit).
5. Specify the desired Loan Term in Months.
6. Click "Compare Options".
7. The table will show a side-by-side comparison, and the conclusion below will state which option costs less overall.

Disclaimer: This calculator provides estimates for comparison purposes. It assumes loan terms and rates are fixed. It does not include taxes, title, license fees, or insurance which also impact overall cost. The "better" option is based purely on the lowest total loan cost. Always verify offers and calculations with the dealer and your lender.