Auto manufacturers may offer either a cash back rebate or a low interest rate with a car purchase. Very often, these offers are mutually exclusive. Use the calculator to find out which of the two is the better offer. Tax and fee procedures apply to car purchases within the U.S. only. The calculator can still be used in other countries, but please adjust the inputs accordingly.
• Enter the Cash Back Amount and standard interest rate for the rebate offer.
• Enter the discounted promotional Low Interest Rate offer.
• Provide vehicle price, down payment, trade-in, and tax information to see which scenario results in the lowest total out-of-pocket expenditure.
| Metric | With Cash Back | With Low Interest |
|---|---|---|
| Total Loan Amount | $39,000.00 | $40,000.00 |
| Sale Tax | $3,500.00 | $3,500.00 |
| Upfront Payment | $15,500.00 | $15,500.00 |
| Monthly Pay | $735.98 | $701.11 |
| Total of 60 Loan Payments | $44,158.69 | $42,066.62 |
| Total Loan Interest | $5,158.69 | $2,066.62 |
| Total Cost (price, interest, tax, fees) | $59,658.69 | $57,566.62 |
Automakers frequently incentivize vehicle sales by offering either an upfront customer cash rebate or special promotional financing (such as 0% or 1.9% APR through their captive finance company). Because dealerships rarely allow buyers to combine both incentives, calculating the lifetime cost of each option is essential.
Low interest financing delivers greater financial savings on larger loan amounts and longer loan durations (e.g. 60–72 months), because compounding interest savings outweigh the fixed lump-sum cash rebate.
In most US states, sales tax is assessed on the pre-rebate vehicle price. Even if you receive a $2,500 rebate, sales tax is calculated on the full negotiated vehicle price, which this calculator models accurately.
If you plan to pay off the loan aggressively in 1–2 years, the cash back rebate often becomes the superior choice because you reduce the principal upfront before substantial interest accumulates.
Calculate monthly car payments, amortization, and total interest.
Estimate monthly lease payments, money factors, and residual values.
Compare multiple loan offers side-by-side to find the lowest APR.
Evaluate interest savings and breakeven timelines from refinancing.