About the Cash Back or Low Interest Calculator
Car dealers and other sellers often offer a choice: take a cash rebate and arrange your own loan, or take a low or zero interest rate from the dealer and forget the rebate. Which one is cheaper depends on the numbers. This calculator compares the two deals side by side. Enter the price, your down payment, the rebate, the interest rate on your own loan, the dealer's low rate and the loan term. It shows the amount financed, the monthly payment, the interest paid and the total cost for each choice, tells you which wins and by how much, and finds the break-even rate on your own loan.
Updated October 2026
How to use the Cash Back or Low Interest Calculator
- 1Enter the price and your down payment.
- 2Enter the cash rebate you give up if you take the low-rate financing.
- 3Enter the rate on your own loan and the dealer's low rate.
- 4Enter the loan term in months.
- 5Read which choice costs less, and the break-even rate.
A worked example
A 30,000 car with a 3,000 down payment, a 2,500 rebate, a 6.5 percent bank loan and a dealer rate of 1.9 percent over 60 months. With the rebate you finance 24,500 and pay about 479 a month. With the low rate you finance 27,000 and pay about 472 a month. The low-rate deal has the lower payment and the lower total cost, about 438 cheaper overall. If you could borrow at 5 percent instead of 6.5 percent, the rebate would become the better choice, because the break-even rate here is about 5.9 percent.
Before you decide
- Get a loan offer from your bank or credit union before visiting the dealer.
- Ask whether the low rate is available for the term you want.
- Check that the price is the same under both offers.
- Confirm there is no penalty for paying off the loan early.
- Compare total cost, not only the monthly payment.
Related tools
The Auto Loan Calculator works out the payment on a car loan, the Auto Lease Calculator compares leasing, the Loan Calculator covers any loan, the Down Payment Calculator plans your deposit and the APR Calculator includes fees in the true cost. This tool is for comparing offers and is not financial advice.
Features
- Side-by-side comparison of both deals
- Monthly payment, interest and total cost for each
- Clear winner and the saving
- Break-even interest rate for your own loan
- Down payment included in the total
- Terms from 1 to 120 months
- Runs in your browser
Frequently asked questions
Should I take the cash rebate or the low interest rate?
It depends on the numbers. A large rebate and a low rate on your own loan favour the rebate. A small rebate, a long term and a high rate on your own loan favour the dealer's low rate. Enter your figures and the calculator shows which costs less in total.
How does the calculator compare the two deals?
For the rebate deal it subtracts the rebate from the amount financed and uses your own loan's rate. For the low-rate deal it finances the full price less the down payment at the dealer's rate. It then adds all the payments and your down payment to give a total cost for each.
What is the break-even rate?
It is the interest rate on your own loan at which both deals cost exactly the same. If you can borrow for less than that, take the rebate. If the best rate you can get is higher, take the dealer's low rate. It is a handy rule when you are shopping for a loan.
Why does the loan term matter?
A low rate saves more money the longer you borrow and the more you borrow, because interest builds up over time. A rebate is a one-off saving. So long terms tend to favour low rates, and short terms tend to favour rebates.
Can the low-rate deal be zero percent?
Yes. Enter 0 as the dealer's rate and the payments are simply the amount financed divided by the number of months. Zero-percent offers usually need excellent credit and may be limited to certain terms.
Does it include fees and taxes?
No. Sales tax, loan fees, insurance and add-ons can change the amounts and the answer. Use the figures from written offers, and apply any tax to the price you enter if the tax is financed.