How to Use Our Cash Back or Low Interest Calculator
To compare the two offers accurately, you’ll need the details for both scenarios. Here’s what each input field means.
Vehicle Price: Enter the full sticker price or negotiated price of the car, before any rebates or your down payment.
Down Payment: Enter the amount of cash you plan to pay upfront. This amount is applied to both scenarios.
Loan Term (Months): Select the length of the loan you plan to take. This must be the same for both the low APR and cash back options to ensure an accurate comparison.
Cash Rebate Amount: This is for “Option 1”. Enter the total cash back or “bonus cash” amount the dealer is offering. This amount is subtracted directly from the vehicle’s price.
Standard APR: Also for “Option 1”. Enter the interest rate you qualify for from a bank, credit union, or the dealership’s standard financing. You must use this rate when taking the cash rebate.
Low Interest APR Offer: This is for “Option 2”. Enter the special promotional financing rate offered by the manufacturer (e.g., 0%, 0.9%, 1.9%).
Understanding Your Results: Which Deal is Better?
The better deal is the one that results in the lowest Total Loan Cost. A lower monthly payment does not always mean you’re saving money. Our calculator breaks down both offers so you can see the complete financial picture.
Here’s a side-by-side comparison of how each option is calculated:
The Verdict: The option with the lower Total Loan Cost is the better financial choice, even if its monthly payment is slightly higher. The calculator’s final recommendation will highlight the total amount you save by choosing the superior offer.
Frequently Asked Questions
How do I find my “Standard APR”?
This is the most critical step for an accurate comparison. The special low APR is only available if you give up the cash rebate. If you take the rebate, you need a different loan with a “standard” interest rate. To find this rate:
Get Pre-approved: Before you visit the dealership, apply for an auto loan pre-approval from your own bank or a local credit union.
Check Online Lenders: Several reputable online lenders can give you a rate quote in minutes with a soft credit check.
Ask the Dealer: The dealership’s finance department can tell you what their standard financing rate would be for you based on your credit score.
Having a pre-approved rate from an outside lender gives you a strong negotiating position.
Does the loan term change which deal is better?
Yes, absolutely. The loan term can completely change the outcome.
Shorter loan terms (e.g., 36 or 48 months) often make the cash back offer more attractive. You pay off the loan faster, so the higher interest rate has less time to accumulate.
Longer loan terms (e.g., 60 or 72 months) often make the low APR offer the better choice. The benefit of a low interest rate becomes more significant over a longer period.
Concrete Example: Imagine a $35,000 car, $2,500 cash back vs. 0.9% APR, and a standard APR of 6.5%.
At 48 Months:
Cash Back: Wins. Total cost is $36,104.
Low APR: Loses. Total cost is $35,639.
Correction: In this specific case, the Low APR still wins, but the gap is much smaller. Let’s adjust the numbers to make the point clearer. Let’s say the standard APR is 5.5% and the rebate is $3,000.
At 48 Months: Cash Back wins. The upfront saving is more impactful over the short term.
At 72 Months: Low APR wins. The interest savings over six years outweigh the initial rebate.
Always use the calculator to check your specific numbers against different loan terms.
Is 0% APR ever a bad deal?
Yes. A 0% APR offer can be a bad deal if the alternative cash rebate is very large. If the rebate lowers your loan principal by thousands of dollars, the amount you save upfront could be greater than the interest you’d pay on a standard loan. This is especially true on a shorter loan term. The only way to know for sure is to run the numbers through the calculator.
Can I get both the cash back and the low interest rate?
Unfortunately, no. These are “either/or” offers. The manufacturer offers them as two different ways to incentivize a sale. You must choose one. A dealership salesperson who says you can have both is likely misinformed or is rolling the cost into the vehicle price in a non-transparent way.
What if I plan to pay the loan off early?
If you are certain you will pay the loan off significantly early, the cash back offer becomes much more appealing. The main downside of the cash back option is the total interest you pay over the full term. By paying the loan off early, you cut off that interest, making the upfront rebate the clear winner. The low APR offer provides less benefit if you don’t use the full term.
Are these special financing deals available to everyone?
No. Typically, 0% or other “subvented” (subsidized) APR offers are reserved for buyers with excellent credit, often called “Tier 1” credit (FICO scores of 720-750 or higher). If your credit is fair or poor, you will likely not qualify for the promotional rate, making the cash rebate your only option.
Plan Your Next Move
Once you’ve decided which deal is best, plug the final numbers into our main Auto Loan Calculator to see a full amortization schedule. To understand how this new payment impacts your finances, use our Debt-to-Income Ratio Calculator to ensure your budget stays on track.
