Decide whether a car dealer's cash rebate or low-interest financing saves you more money. Enter the vehicle price, rebate amount, promotional rate, your bank's rate and loan term — get a clear dollar verdict with side-by-side payment and total cost comparison.
Enter the vehicle price, the cash rebate amount offered by the dealer, and the dealer's promotional APR (which may be 0%). Then enter your pre-approved bank rate — this is the rate you would pay if you took the cash rebate and financed elsewhere. Select your loan term.
The calculator runs both scenarios simultaneously: (1) Cash Back — take the rebate, reduce the purchase price, finance at your bank rate; (2) Low Rate — skip the rebate, pay full price, finance at the dealer's promotional rate. You see both monthly payments and total costs instantly.
A clear verdict banner shows which option saves you more and by exactly how much over the life of the loan. It also shows the break-even bank rate — the rate at which both options would be equal — so you can understand how sensitive the result is to your financing rate.
The calculator runs both scenarios using the standard amortization formula M = P × r(1+r)ⁿ / ((1+r)ⁿ - 1). For the cash back option: principal = price minus rebate, rate = your bank rate. For the low rate option: principal = full price, rate = dealer promotional rate. Comparing total payments (monthly payment × loan term) gives the dollar difference.
Cash back tends to win when the rebate is large (typically $3,000 or more), when your bank or credit union rate is close to the dealer's promotional rate, and when the loan term is shorter (36-48 months). If the rate difference between your bank and the dealer is small, the guaranteed principal reduction from the rebate usually saves more.
Low-rate financing wins when the dealer rate is dramatically lower than your bank rate — especially true for 0% APR deals on longer terms. For example, 0% APR over 72 months versus your bank's 7% rate on a $40,000 vehicle represents roughly $9,000 in interest savings, which typically exceeds even a $3,000 rebate.
The break-even rate is the bank financing rate at which both options cost exactly the same total amount. If your bank offers a rate below the break-even rate, cash back wins. If your bank's rate is above the break-even rate, the dealer's low rate wins. This calculator shows the break-even rate so you can benchmark your actual bank rate against it.
Sometimes yes — some deals allow you to take the rebate and finance with the dealer at their standard (non-promotional) rate. Always ask the dealer explicitly whether the rebate and low-rate offer are mutually exclusive or can be combined. If they are mutually exclusive, this calculator helps you choose the better one.
Always negotiate the vehicle price independently of the incentive decision. Once you agree on a price, then compare whether the rebate or low rate saves more at that price. Never let a dealer bundle both into a single monthly payment discussion — that obscures the real comparison.
