Rebate or Low APR Calculator
With price before the deal 35000 usd, down payment 3500 usd, cash rebate offered 2500 usd, your bank’s rate 7.5 percent and 2 more fields, rebate or low apr comes to $1,821.18 — rebate minus low apr. It is reached in 9 steps, the last of which is 38366.031 - 36544.849, and each one is printed on the page with its numbers filled in. The formula is the one published by CFPB, not an approximation fitted to it.
A dealer offers a rebate or a subsidised rate, never both. This compares the two deals over the same term and says which costs less, and by how much.
Formula and sources checked · How we check
Price before the deal 35000, Down payment 3500, Cash rebate offered 2500, Your bank’s rate 7.5
$1,821.18
Rebate minus low APR for the example below. Editing a field recomputes the calculator below; this figure holds the answer the page was loaded with.
It is written into the HTML rather than drawn by a script, so a search engine reading this page without running JavaScript still finds an answer.
- Financed with the rebate
max(0, 35000 - 2500 - 3500)$29,000- Financed with the low rate
max(0, 35000 - 3500)$31,500- Payment with the rebate
29000 * 0.00625 / (1 - pow(1 + 0.00625, -60))$581.10- Payment with the low rate
31500 * 0.0015833 / (1 - pow(1 + 0.0015833, -60))$550.75- Total paid with the rebate
581.10051 * 60 + 3500$38,366- Total paid with the low rate
550.74749 * 60 + 3500$36,545- Rebate minus low APR
38366.031 - 36544.849$1,821- The cheaper deal saves
abs(38366.031 - 36544.849)$1,821- Difference in the monthly payment
abs(581.10051 - 550.74749)$30.35
Worked example
The rebate finances $29,000 at 7.5% — $581.11 a month, $38,367 in all including the deposit. The 1.9% deal finances $31,500 at 1.9% — $550.75 a month, $36,545 in all. The subsidised rate wins by $1,821 here, and it also has the lower payment, which is the case where the choice is easy.
How to work it out yourself
- 1.Get your own rate before you go in. The rebate deal is only as good as the loan behind it, and a credit union pre-approval is what makes the comparison real rather than hypothetical.
- 2.Compare over the same term. A 0% offer often runs 36 months against 72 for the rebate, and a shorter term raises the payment even at no interest — which is a cash-flow decision, not a cost one.
- 3.Check whether the promotional rate needs a credit tier you actually have. "0% APR for well-qualified buyers" means the tier one score; anyone else is offered the standard rate and no rebate, which is the worst of both.
- 4.Take the rebate off the price before sales tax where your state allows it. Several states tax the price after a manufacturer rebate, which is worth another few hundred dollars and never appears in the finance quote.
Which deal wins as your own rate moves
| Your bank’s rate (percent) | Rebate minus low APR | Total paid with the rebate | Total paid with the low rate |
|---|---|---|---|
| 3 | -$1,779.33 | $34,766 | $36,545 |
| 4.5 | -$606.00 | $35,939 | $36,545 |
| 6 | $594.23 | $37,139 | $36,545 |
| 7.5 | $1,821.18 | $38,366 | $36,545 |
| 9 | $3,074.69 | $39,620 | $36,545 |
| 11 | $4,786.97 | $41,332 | $36,545 |
The formula
- Financed with the rebate
max(0, 35000 - 2500 - 3500) - Financed with the low rate
max(0, 35000 - 3500) - Payment with the rebate
29000 * 0.00625 / (1 - pow(1 + 0.00625, -60)) - Payment with the low rate
31500 * 0.0015833 / (1 - pow(1 + 0.0015833, -60)) - Total paid with the rebate
581.10051 * 60 + 3500 - Total paid with the low rate
550.74749 * 60 + 3500 - Rebate minus low APR
38366.031 - 36544.849 - The cheaper deal saves
abs(38366.031 - 36544.849) - Difference in the monthly payment
abs(581.10051 - 550.74749)
Source: CFPB — understanding vehicle financing, FTC — buying and owning a car: financing, Federal Reserve G.19 — consumer credit, new car loan rates
Questions people actually ask
- Is cash back or low interest better?
- Whichever leaves the smaller total. The rebate wins when your own borrowing rate is close to the promotional one, since the discount is immediate and the interest saved is small. The subsidised rate wins when the gap between the two rates is wide, the loan is large, or the term is long.
- Can I take the rebate and the 0% financing?
- Almost never. Manufacturers present them as alternatives because the rebate and the rate subsidy are the same marketing money spent two ways. Where both appear, one is usually a dealer discount rather than a factory rebate — read which is which before assuming they stack.
- Does the rebate reduce sales tax?
- In some states. A manufacturer rebate is treated as a price reduction in most states and taxed as part of the price in others, including California and Michigan. On a $2,500 rebate at 7% that is $175, enough to change a close comparison.
- Why does the low rate win even though the loan is bigger?
- Because interest compounds over the whole term and the rebate is a single fixed amount. Financing $2,500 more at 1.9% costs about $122 in interest over five years; the same $29,000 at 7.5% instead of 1.9% costs roughly $4,400 more. The rate gap is doing more work than the rebate.
Related
- Auto Loan CalculatorCar payment including sales tax, fees, and a trade-in — with the negative equity most calculators quietly leave out.
- Loan Payment CalculatorMonthly payment and total interest on any fixed-rate instalment loan — car, personal or student.
- Sales Tax CalculatorTax and total from a pre-tax price, plus the reverse — the pre-tax price hidden inside a total you already paid.
- Depreciation CalculatorStraight line, declining balance and sum-of-years depreciation side by side, with the book value each leaves at the end of a year.
- Mortgage Payment CalculatorMonthly principal-and-interest payment on a fixed-rate mortgage, plus total interest paid over the full term.
- Credit Card Payoff CalculatorHow many months a card balance takes to clear at a fixed monthly payment, and what the interest costs.
Put this calculator on your site
Free, no attribution required beyond the link.
<iframe src="https://rulecalculators.com/embed/cash-back-vs-low-interest" width="100%" height="420" style="border:1px solid #e7e4de;border-radius:12px" title="Rebate or Low APR Calculator"></iframe>