Cash back or low interest calculator
Whether a car rebate or the dealer’s low-rate financing saves you more.
About this calculator
Should you take the cash back or the low interest rate? This calculator compares the two car deals side by side.
Enter the price, the rebate, the promotional rate and the rate your bank would give you. It shows the monthly payment and total cost of each, and the bank rate at which they cost the same.
How it works
The low-rate deal finances the full price at the promotional rate. The cash back deal takes the rebate off the price and finances the rest at your own bank’s rate. The cheaper choice is the one with the lower total of payments.
Last reviewed:
Worked example
- Vehicle price: $40,000
- Down payment and trade-in: $5,000
- Cash back rebate: $3,000
- Low promotional rate: 0.9% a year
- Rate from your bank or credit union: 6.5% a year
- Term: 60 mo
Take the low rate and save: $1,760.48
Common questions
Is 0% financing better than cash back?
It depends. A big rebate and a short loan often favour the cash back, while a long loan at 0% can save more. Compare the total cost, as this calculator does.
Can I get both the rebate and the low rate?
Usually not: manufacturers make you choose one. Ask the dealer in writing which offers can be combined.
Why get a loan quote from my bank first?
It shows the rate you would pay with the cash back option, and gives you a benchmark for the dealer's financing.
Sources and further reading
The story behind it
Where the idea came from: Zero-percent car loans became a major sales tool in the United States after 2001, when car makers used them to keep buyers coming into showrooms.
Since then, buyers have often had to choose between a rebate and a low rate. Which is better depends on the size of the rebate, the rates and the loan term, so it pays to run the numbers.
Why you can trust this calculator
- It runs in your browser. Nothing you type into it is sent anywhere.
- The method is explained on this page, so you can check it yourself.
- Free to use, with no sign-up.
- Results are estimates, not financial advice.
- Spotted a mistake? Tell us and we'll look into it.
After 15 years as a mathematics educator, I built CalculStore to give students, teachers, professionals and anyone working with numbers simple, reliable tools.
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