Auto Rebate vs. Low Interest Financing

This Auto Rebate vs. Low-Interest Financing Calculator will help you to decide if a This Auto Rebate vs. Low-Interest Financing Calculator will help you to decide if a traditional dealer-based financing with a manufacturer’s rebate is the most cost-effective solution for you, or outside financing with a lower interest rate will cost you less in the long run. Just input the relevant information about your auto and loan details and the calculator will give you a clear result to help you ensure that you make the best choice in your particular situation. You'll need information to hand such as the price of the car, the different interest rates and amount of the rebate.

By changing any value in the following form fields, calculated values are immediately provided for displayed output values. Click the view report button to see all of your results.

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Auto financing:

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Total price (before tax):*This entry is Required.Enter an amount between $100 and $250,000

Term in months:*This entry is Required.Enter an amount between 12 and 120

Sales tax rate:*This entry is Required.Enter an amount between 0% and 30%

Low interest financing:*This entry is Required.Enter an amount between 0% and 25%

Traditional financing:*This entry is Required.Enter an amount between 0% and 25%

Manufacturer rebate:*This entry is Required.Enter an amount between $0 and $20,000

Rebate payment:

$377 monthly

Low interest payment:

$398 monthly

Down payment:
Cash down: $1,500, Trade allowance: $5,000, Amount owed on trade: $4,000

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Manufacturer rebate could save you $1,019 in total payments Column Graph: Please view the report to see detailed calculation results in tabular form.

Manufacturer rebate could save you $1,019 in total payments.

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Get your Rates!

Definitions

Total purchase price (before tax)

This is the total cost of your auto purchase. Include the cost of the vehicle, any additional options and any destination charges. Don't include sales tax in this amount. Sales tax will be calculated for you and included in your total after-tax price.

Term in months

Number of months for your auto loan.

Cash down

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.

Trade allowance

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 amount of sales tax you will owe. See the definition for 'Sales tax deduction for trade-in' for more information on trade-in vehicles and sales tax.

Amount owed on trade

Total loan balance still outstanding on the trade-in.

Sales tax rate

Sales tax percentage rate charged on this purchase.

Traditional financing

The interest rate you may be able to 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 used in combination with a manufacturer rebate. This calculator assumes that if you choose a manufacturer rebate you are not eligible for manufacturer low interest financing.

Low interest financing

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% per year. 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.

Manufacturer rebate

A cash rebate paid by the auto manufacturer to you when you purchase a new vehicle. Most manufacturers allow you to choose either low interest financing or a manufacturer rebate, but not both.

No sales tax deduction for trade-in

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. Currently California, the District of Columbia, Hawaii and Michigan allow no deductions for trade-ins when calculating sales tax. In addition, Alaska, Delaware, Montana, New Hampshire, and Oregon have no sales tax on autos.

Calculate sales tax before rebate

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.

Auto Rebate vs. Low Interest Financing Calculator Overview

Buying a new car is an important step towards independence, and requires a certain level of financial security. The decisions you will make when choosing your new car go far beyond color and style and will have lasting effects on your financial future.

For this reason, it is always a good idea to do your research and be aware of all the options that are available to you in the process. One decision you will need to make will be choosing between an auto rebate and a low interest type of financing on your auto loan.

An auto rebate is basically money given back to you by the auto manufacturer as an incentive to make the purchase. Low interest financing is a way of financing your new auto purchase that will allow you to have lower monthly payments as opposed to having a lower balance with the rebate.

The choice we are trying to make here is; is it better to owe less with high interest, or owe more with low interest?

How To Use The Auto Rebate vs. Low Interest Financing Calculator

Follow these steps:

Input the total price of your new auto, discounting any tax
Specify the length of the term over which you will pay for the auto, in months
If you are paying sales tax, enter the rate in the next field
Next to Low interest financing, add the interest rate offered to you by the manufacturer
Add the interest rate you would pay if you financed the purchase with a bank loan or similar – usually required if you opt to take the manufacturer rebate
Finally, add the manufacturer rebate that has been offered and click View Report to see your results.

Who is this Calculator for?

This calculator is most useful if you:

Are in the process of purchasing a new car
Are considering purchasing a new car, and would like to weigh up the different payment options
Would like to see whether a low interest finance loan or a manufacturer rebate offers better value for money in the long run

What happens if I miss a payment on my low interest finance loan?

The answer to this question is largely down to the manufacturer, and the agreement you make with them. However, it is worth noting that the results you see from this calculator assume that all payments are made on time. Refinancing the loan and/or making prepayments on the debt will also alter the result you see here.

Why do manufacturers offer rebates?

It's simple - to increase sale volumes. Just like a discount you might find in the grocery store, car manufacturers use rebates to offer customers a slightly better deal on their brand. Sometimes, it's because sales are lagging and they've got excess inventory they want to move. Or to secure brand loyalty. It is common for a person to purchase the same car brand multiple times throughout their life, so by shaving 10% off the price now, the manufacturer is hoping to secure your business for decades to come.

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