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.