Two offers, one vehicle
How to compare cash back with low-interest financing
Use the same negotiated vehicle price, financed taxes and fees, down payment, trade-in credit and loan term for both sides. The cash-back side subtracts the rebate from the amount financed and applies the standard rate. The low-interest side keeps the larger balance and applies the promotional rate.
P is the amount financed, r is the annual rate divided by 12, and n is the number of monthly payments. At 0%, the financed amount is divided evenly by the term.
Worked example
$2,500 cash back versus 1.9% financing
For a $40,000 vehicle with $4,000 down and $3,000 of financed taxes and fees, the amount before the rebate is $39,000. The rebate option finances $36,500 at 6.5%; the low-rate option finances $39,000 at 1.9%, both for 60 months.
In this example, the lower rate wins even though its starting loan balance is $2,500 higher. The result changes with the rebate, both rates and the loan term.
Look beyond the monthly figure
Why the calculator compares total loan payments
A smaller payment does not by itself prove that an offer costs less. The Consumer Financial Protection Bureau recommends comparing the amount financed, APR or interest rate, loan length and monthly payment. This calculator keeps the term the same and displays the full sum of scheduled loan payments for both offers.
Consumer reference: CFPB guidance on comparing auto-loan offers.
Use the written terms
Check eligibility, taxes and rebate treatment
Promotional financing and manufacturer rebates can have eligibility rules, expiration dates and vehicle restrictions. Confirm whether the offers can be combined or require a choice. Also confirm whether the rebate reduces the amount financed immediately and whether tax is calculated before or after it.
- Negotiate the vehicle price first. Enter the same price for both offers.
- Use net trade-in credit. Subtract any balance still owed from the dealer’s trade allowance before entering it.
- Enter fixed common costs. Use the financed taxes and mandatory fees from the written quote.
- Match the term. If the promotion requires a different term, compare separate complete offers with the main calculator.
Read the disclosure
APR, finance charge and total of payments
A Truth in Lending disclosure for an auto loan shows the APR, finance charge, amount financed, payment schedule and total of payments. Compare the calculator with those figures before signing. APR can include mandatory loan fees, while this estimate uses the entered annual rate as the rate for a standard fixed-payment calculation.
This is an educational estimate, not a loan offer. Actual payment calculations, fees, tax treatment and incentive eligibility come from the dealer, lender and signed agreement.
Official reference: CFPB explanation of auto-loan Truth in Lending disclosures.
What the break-even rebate means
How much cash back would match the promotional rate?
The break-even result solves for the rebate that would make total scheduled payments under the standard rate equal the total under the promotional rate. If the offered rebate is above that number, the rebate option is estimated to cost less; if it is below, the low-interest option is estimated to cost less.
The result assumes both rates and the shared term remain fixed. It does not predict qualification or future refinancing.