Cash rebate vs low rate financing
The seller offers either a rebate on the price or a loan at a low rate. We compare both over the same length, with no other fees, to see which costs less in total.
Result
812.86The low rate costs less, by
- With rebate: monthly payment
- 538.07
- With rebate: total paid
- 32,284.14
- With rebate: interest
- 4,784.14
- With low rate: monthly payment
- 524.52
- With low rate: total paid
- 31,471.29
- With low rate: interest
- 1,471.29
Inputs
- Price before rebate
- 30000
- Rebate amount
- 2500
- Rate if I take the rebate
- 6.5
- Low rate offered
- 1.9
- Loan length
- 5
How it is calculated
Rebate option: borrow price − rebate at the normal rate.
Result
The low rate costs less, by
- With rebate: monthly payment
- 538.07
- With rebate: total paid
- 32,284.14
- With rebate: interest
- 4,784.14
How it is calculated
- Rebate option: borrow price − rebate at the normal rate.
- Low-rate option: borrow the full price at the low rate.
- Same length and fixed monthly payments in both cases; we compare the total paid.
Example
Car at 30,000, a 2,500 rebate with a loan at 6.5%, or 1.9% with no rebate, over 5 years: 538.07 vs 524.52 a month; the low rate costs 812.86 less in total.
Good to know
- Same fees assumed in both options.
- If you pay cash, the rebate is usually the better option.
Frequently asked questions
What is this tool used for?
The seller offers either a rebate on the price or a loan at a low rate. We compare both over the same length, with no other fees, to see which costs less in total.
How is the result calculated?
Rebate option: borrow price − rebate at the normal rate.
What should I check before using the result?
Same fees assumed in both options.