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Car dealers often offer a choice: take a cash-back rebate but finance at the standard rate, or skip the rebate for a promotional low (sometimes 0%) interest rate.
This calculator compares the total cost of both options to show which one actually saves you more money.
How it works
Enter the vehicle price, the cash-back rebate amount, the standard rate you'd pay with the rebate, the promotional low rate without it, and your loan term. The calculator finds the total amount paid under each option and reports which one costs less.
- Enter vehicle price ($).
- Enter cash back rebate offer ($).
- Enter standard rate with rebate (%).
- Enter promotional low rate, no rebate (%).
- Enter loan term (months).
- Click Calculate to see your results.
Examples
$35,000 vehicle, $2,000 rebate vs. 0.9% financing
A $35,000 vehicle with a $2,000 rebate at 6.5% costs $38,740.80 total over 60 months, while skipping the rebate for 0.9% financing on the full price costs $35,806.80 — saving $2,934 by choosing low-interest financing.
Who should use it
- Deciding between a manufacturer rebate and promotional financing when buying a vehicle.
- Understanding how loan term length affects which financing option is better.
Industry applications
- Auto sales and dealership financing
- Consumer lending and personal finance
Advantages
- Directly compares total cost, not just monthly payment, across both financing options.
- Works for any rebate amount, rate pair, and loan term.
Limitations
- Doesn't account for potential investment returns if the cash-back amount were invested instead of applied to the purchase.
Common mistakes to avoid
- Automatically taking the cash back without checking whether the promotional rate would actually save more over the loan term.
- Forgetting that a longer loan term amplifies the impact of the interest rate difference.
Best practices
- Always run both options through a calculator like this rather than assuming the cash-back offer is automatically the better deal.
Tips
- If you plan to pay off the loan early, the cash-back option (which reduces the principal upfront) often becomes relatively more attractive, since you'll pay less total interest at the promotional rate anyway.