Cash Back or Low Interest Calculator
Compare a manufacturer cash-back rebate against a promotional low-interest financing offer to see exactly which one saves more money for your specific deal.
THE TWO OFFERS
💵 Option A — Cash Back Rebate
🏷️ Option B — Low Interest Financing
No cash rebate with this offer — the full vehicle price is financed at the promotional rate.
VEHICLE & LOAN DETAILS
🏆 Low Interest Financing Wins!
Option B saves you $2,018 more than the other option over 60 months.
$2,018
Option A — Cash Back
$645 /month
- Cash Rebate Applied
- $2,000
- Loan Amount
- $32,950
- APR
- 6.5%
- Total Interest
- $5,732
- Total of Payments
- $38,682
- Total Out-of-Pocket
- $41,682
Option B — Low Interest
$611 /month
- Cash Rebate Applied
- —
- Loan Amount
- $34,950
- APR
- 1.9%
- Total Interest
- $1,714
- Total of Payments
- $36,664
- Total Out-of-Pocket
- $39,664
📊 Side-by-Side Cost Breakdown
💡 How to Use These Results
📋 Loan Term Sensitivity
| Term | Winner | Savings Amount |
|---|---|---|
| 36 mo | Low Interest | $373 |
| 48 mo | Low Interest | $1,185 |
| 60 mo | Low Interest | $2,018 |
| 72 mo | Low Interest | $2,872 |
| 84 mo | Low Interest | $3,747 |
Cash Back vs Low Interest: How to Decide
Car manufacturers and dealers routinely offer two mutually exclusive incentives on the same vehicle: a cash-back rebate (an instant discount off the purchase price) or promotional low-interest financing (a reduced APR through their captive lender). You usually cannot get both, so choosing correctly can save or cost you real money. The right answer turns on four variables: the rebate size, the spread between your standard rate and the promotional rate, the loan amount, and the loan term. For the underlying loan math, see our auto loan calculator and interest rate calculator.
💵 What Is a Cash Back Rebate?
A direct discount off the purchase price. It reduces both your monthly payment and your total interest, but you forgo the promotional rate — you usually cannot stack a rebate on top of the low-interest offer.
🏷️ What Is Low-Interest Financing?
A reduced APR, often through the manufacturer's captive lender. It typically requires strong credit and doesn't reduce the purchase price — the longer the loan and the larger the rate spread, the more valuable it becomes.
📊 Worked Example: $35,000 Car
Say a $35,000 vehicle qualifies for either a $2,000 cash-back rebate at your bank's 6.5% rate, or 1.9% promotional financing with no rebate, both over 60 months. Financing the rebated price at 6.5% runs noticeably more total interest than financing the full price at 1.9% — over a 60-month term the low-interest offer typically pulls ahead once the rate spread is this wide, even though it means giving up $2,000 upfront. Shorten the term to 36 months or shrink the rate spread and the rebate can win instead — that crossover is exactly what the calculator above solves for your own numbers.
✅ When Cash Back Is Better
- Short loan terms (36-48 months)
- Large rebate relative to the rate spread
- You don't qualify for the promotional APR
- Planning to sell or trade within a few years
- A large down payment shrinks the loan
✅ When Low Interest Is Better
- Long loan terms (60-84 months)
- 0% APR offers eliminate interest entirely
- High vehicle price or large loan amount
- A small rebate rarely beats a 3-4% rate cut
- You qualify for the promo rate with excellent credit
🧾 How Sales Tax Affects the Decision
In most US states, a cash rebate lowers the taxable purchase price, saving you a bit of extra sales tax on top of the rebate itself. A handful of states tax the pre-rebate price instead, which slightly narrows cash back's advantage. Enter your own state's sales tax rate above — the calculator applies it consistently to both options so the comparison stays accurate for your state.
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