Rebate Vs. Low-Interest Car Payment Comparison Calculator

Apr 18, 2024

This car payment calculator will help you decide whether a rebate vs. low-interest auto loan is best for your needs. Most manufacturers won’t let you combine a 0 percent APR (annual percentage rate) offer with a rebate, so you’ll need to determine which option would help you save the most money.

A rebate is cash back that typically comes from the car’s manufacturer. You can combine it with a standard auto loan from the dealership or another lender — and comparison shopping can help you find the lowest interest rate available. But if you accept a low-APR deal from the manufacturer or dealer, you likely won’t be able to claim the rebate.

Calculate your car payments

This car payment calculator will help compare financing between a credit union or bank and low-interest dealer financing. Dealers or manufacturers often offer rebates or low-interest financing, but rarely both together. Combining a rebate with a higher interest bank or credit union car loan may provide a lower initial loan balance and, in many cases, a lower monthly payment. The better choice depends on the price of the vehicle, the amount of the rebate and the interest rate.

How to calculate your car payments

To find if an auto rebate or low-interest financing is best for you, follow the below steps..

Enter loan information. To begin the comparison process, first enter the total auto financing price including any additional tax rates. Then input your traditional financing rate and the manufacturer rebate amount.
Adjust financing numbers. Use the sliders to determine how varying the rates and terms will shift the resulting monthly payments.
View the report and compare. View the full report with a complete list of the components used to calculate the values. This makes it easy to decide which option will help you save the most money over the loan’s lifetime. You can also print this report.

Auto rebates vs. low-interest financing

While an auto loan rebate and low-interest financing both save you money, they do so differently.

A rebate is an incentive that will give you money back in exchange for the vehicle purchase. Its main benefit is lowering your total loan amount because it will likely be applied to your down payment.
Low-interest financing, on the other hand, means that you finance the full cost — minus your down payment — but you pay less interest over the life of the loan. A common form of low-interest financing is 0 percent APR deals, which allow drivers to borrow money for free. However, only those with excellent credit qualify.

Dealers or manufacturers often offer rebates or low-interest financing, but rarely both. Combining a rebate with a bank or credit union car loan may provide a lower initial loan balance and, in many cases, a lower monthly payment. The better choice depends on the price of the vehicle, the amount of the rebate and the interest rate.

If you don’t qualify for a 0 percent APR deal, it’s likely an auto rebate will save you more money. However, it is important to calculate the expected costs before agreeing to one over the other.

Definitions

Total loan balance still outstanding on the trade-in.
Some states will calculate sales tax on your purchase price before a manufacturer's rebate is applied. If your state calculates sales tax on the vehicle price before the rebate is applied, check this box.
Total amount of cash used in this purchase. The larger your cash down payment the smaller the loan you will need to finance this purchase.
The incentive interest rate you may be able to receive from an auto manufacturer. These rates are usually significantly below standard auto loan interest rates.

Low interest financing can be as little as 0 percent. Most manufacturers allow you to choose either low interest financing or a manufacturer rebate, but not both. This calculator assumes that if you choose low interest financing you are not eligible for any manufacturer rebate.
A cash rebate paid by the auto manufacturer when you purchase a new vehicle. Most manufacturers allow you to choose either low-interest financing or a manufacturer rebate, but not both.
If you live in a state where your sales tax is calculated on your full purchase price check this box. If this box is unchecked sales tax is calculated on the purchase price less trade-in. Alaska, Delaware, Montana, New Hampshire and Oregon have no sales tax on autos.
Sales tax charged on this purchase, expressed as a percentage.
Number of months for your auto loan.
This is the total cost of your auto purchase. Include the cost of the vehicle, any additional options and destination charges. Don't include sales tax in this amount. Sales tax will be calculated and included in your total after-tax price.
The total amount that you are given for any automobile that you trade in as part of this purchase. In some states a trade-in can also reduce the sales tax you will owe.
The interest rate you may receive from a bank, credit union or other lender. This is usually a higher interest rate than the manufacturer's low-interest financing, but is often very competitive when combined with a manufacturer rebate. This calculator assumes that if you choose a manufacturer rebate you are not eligible for manufacturer low-interest financing.

Rebate Vs. Low-Interest Car Payment Comparison Calculator

Calculate your car payments

How to calculate your car payments

Auto rebates vs. low-interest financing

Definitions

Amount owed on trade

Calculate sales tax before rebate

Cash down

Low-interest financing

Manufacturer rebate

No sales tax deduction for trade-in

Sales tax rate

Term in months

Total purchase price (before tax)

Trade allowance

Traditional financing