The choice dealers make you weigh
Manufacturers frequently offer two incentives that you cannot combine: a cash rebate, or special low-rate financing. Picking one means giving up the other, and the cheaper choice is not obvious because they save you money in different ways.
Option A takes the rebate and subtracts it from the amount you finance, but you borrow at the standard interest rate. Option B keeps the full balance with no rebate, but at the promotional low rate. This calculator amortizes both and compares the total you would pay over the term, so the better deal is decided by arithmetic rather than guesswork.
How to read the comparison
The headline tells you which option costs less and by how much. The table lists each option’s monthly payment and total cost, and the bar chart puts the two total costs side by side so the gap is easy to see at a glance.
Watch both numbers: an option can have a lower total cost but a higher monthly payment, or vice versa, depending on the rebate size and the rate gap.
What tips the balance
A few factors decide which incentive wins:
- A large rebate relative to the price favors taking the cash, because it cuts the balance immediately.
- A very low promotional rate over a long term can outweigh a modest rebate.
- Shorter terms generally favor the rebate, since there is less time for the rate difference to add up.
- If you plan to pay the loan off early, the upfront rebate usually has the edge.
Caveats
This compares only the financing math for the amounts you enter. It does not account for opportunity cost, taxes on the rebate, or dealer add-ons. Confirm the exact rebate, promotional rate and eligibility, since the best low-rate offers often require strong credit.
Formula
A: amortize (price − down − rebate) at standardApr; B: amortize (price − down) at lowApr; total = payment × termMonthsFrequently asked questions
- When is the rebate better than low interest?
- A rebate tends to win on shorter terms and smaller rate gaps, since it cuts the balance up front. A very low APR over a long term can outweigh the rebate. This calculator does the math for your numbers.