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0% APR vs. Rebate Comparison

Last Modified: June 02, 2016 by Jeff Ostroff

Which is better: a rebate or special new car financing?

Many times car manufacturers will run two promotions at the same time and you will have to choose which one is best for you. Usually it will be a choice between 0% (or very low) APR financing and a cash rebate. The only way to know for sure will be to calculate the total cost of the loan for each option. Simply, you will need to multiply the monthly payment for each case by the number of months. See which one comes out lower and go with it.

The table below shows a real world example where you are buying a new car for $19,287 and trading in your old car for $2,000. It compares side by side the 0% APR rate with a higher 4.39% rate and shows that even with a higher APR, the rebate saved the most money. Crunch the numbers for your case and see which is best.

0% Rate vs. $3,000 Rebate Comparison
Annual Percentage Rate0%4.39%
Cost of Car$19,287$19,287
Less Equity in Trade$2,000$2,000
Less Rebate$0$3,000
Amount of Finance$17,287$14,287
Monthly Payment$288.12$265.64
Total Cost$17,287.20$15,938.40

As you can see in this example, it was better to take the rebate.