Cash Back vs Low Interest Calculator

It depends on the specific numbers. Generally, larger rebates favor the cash back option, while significantly lower interest rates and longer loan terms favor the low-rate financing. Use the calculator to compare the total cost of each option.

The total cost includes the vehicle price, sales tax, fees, plus all interest paid over the loan term. For cash back, subtract the rebate amount but calculate interest on the regular rate. For low-rate financing, use the promotional rate but no rebate.

Including taxes and fees in your loan reduces your upfront costs but increases the total loan amount and interest paid. If you have cash available, paying these costs upfront typically saves money long-term.

Typically, manufacturers offer either a cash rebate OR a low interest rate, not both. These are usually mutually exclusive promotional offers. However, you may be able to negotiate the vehicle price separately from these financing incentives.

Longer loan terms generally make the low interest rate option more attractive because you pay interest for more months. The difference in rates has more time to compound. Shorter terms often favor the cash rebate option.

Compare your bank's rate to both manufacturer options. Sometimes a credit union rate plus the cash rebate beats both manufacturer offers. Shop around for the best combination of rate and rebate.

Manufacturer rebates are generally not considered taxable income to the buyer. The rebate reduces the purchase price, which lowers the amount subject to sales tax. Consult a tax professional for your specific situation.

The calculator provides accurate comparisons based on the inputs provided. However, actual loan terms may vary based on your credit score, down payment, and lender requirements. Use this as a starting point for your decision-making process.