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Buying a car can present a financing challenge: whether to take a rebate that's available with dealer financing, or get an auto loan through a credit union or other lender that's offering a lower rate. Which is the better deal? This Dealer Financing vs. Credit Union Financing Calculator is designed to help you sort that out. It will take into account the price you paid, taxes the competing interest rates, the rebate you get with a dealer loan, the down payment and trade in, and will crunch all the numbers to let you see which is the better deal.
Auto sales are a highly competitive business. To compete, car dealers have come up with a lot of ways to play around with the numbers to get your attention and give impression you're getting a great deal. But are you?
One of the popular tools for selling cars is rebates, a discount off the price of a car. Sometimes, these are offered by the manufacturer and are available to anyone buying a particular vehicle. Other times, though, a rebate is tied to dealer financing – you only get the rebate if you finance the purchase through the dealer. And the interest rate on a dealer loan may be higher than what you'd pay if you financed the purchase through a credit union or other lender. So… are you saving money or not with the rebate?
This calculator is specifically designed to provide an easy answer that question. It takes what you're actually paying for the vehicle, trade ins, down payment and tax included, and does an apples-to-apples comparison to show which option will give you the lowest payments – outside financing at a low rate, or dealer financing with a rebate.
You'll not only be able to compare monthly payments for loans of equal length, but the calculator will also show you the difference in your total cost between the two options over the length of the loans. You'll also be able to see the difference in interest you'd pay on one loan vs. the other.
Enter the information for the car purchase and the two loan options in the boxes in the calculator. If you have questions about any particular box, click on the title to pop up a more detailed explanation. Note that you can adjust the entries for the various boxes by using the sliding green triangles.
Use "low interest financing" to enter the interest rate charged by the credit union or other alternative lender. Use "traditional financing" to enter the interest rate charged by the dealer in connection with the rebate.
Enter the sales tax rate charged in the state where you are purchasing the vehicle, the amount of the rebate and the length of the loan. The calculator will determine the monthly payments on both loans and display them in the fields labeled "rebate payment" and "low interest payment."
For a more detailed breakdown of the loan options, click the "View Report" button at the top of the page.