0% Financing vs. Cash Back Rebate

Given that you are aware of the cash back rebates available from the manufacturer, it is now time for some simple math to compare your options. 0% Financing vs. Cash Back Rebate

When it comes to financing your car, it is often a headache, especially for inexperienced car buyers. With car manufacturers offering loan incentives such as 0% financing, you are very likely to face the dilemma of doing zero/low APR or taking a cash back rebate. The good news is that making the right choice is very simple, and below we break it down step by step for you, so don’t sweat.


Step 1: Check your credit

In order to qualify for a zero/low APR offer, you will need a great credit. So check your credit score and if it is not so good, take the cash rebate and stop reading. You are all set! If your credit score turned out to be great, move on to step two.

Step 2: Check your interest rate

Check at what rate you can get your own financing. There are different sites that can help you do this. In fact, if you decide to use car buying services like Nabthat you won’t have to select a rate at all, as it will be given to you by dealerships after taking into account your credit score.

Step 3: Convert cash rebates into comparable interest rates

Given that you are aware of the cash back rebates available from the manufacturer, it is now time for some simple math to compare your options.

Let’s look at an example of a typical new car costing $25,000 (with state taxes of 5%). According to the table we’ve made below, a $1,000 cash rebate is equivalent to a 2% difference in interest rates for a loan period of 48 months and 1.5% for 60 months.


Cash Rebate 48 mo 60 mo
$1,000 2% 1.5%
$1,500 3% 2.2%
$2,000 4% 3.2%
$2,500 5% 4%
$3,000 6% 5%


Step 4: Pick the better deal

So suppose you are choosing between a cash rebate of $1,000 and 0% financing over 48 months (furthermore suppose you can get 4% for 48 months on your own).

Option 1): Pick the cash rebate and save $1000 (2%)
Total Saving: 2%

Option 2): Pick the 0% financing over 48 months instead of financing on your own at 4% for 48 months.
Total Saving: 4%

The choice is clear, the 0% financing deal is the way to go. Unless the cash rebate goes up to $2,000, we will stick with Option 2.

Let us know if you have any questions!


By: Zcodia technologies

Given that you are aware of the cash back rebates available from the manufacturer, it is now time for some simple math to compare your options.

Article Directory: https://www.articledirectoryusa.com

Source: http://www.articledirectoryusa.com/article/category/vehicles/car-buying/0-financing-vs-cash-back-rebate/

Article Tags: buying cars online , technical specifications of cars , New Cars Prices

Submitted On Aug 27, 2014. Viewed 311 times.

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