Car makers often let you choose between a cash back rebate or a special low APR, but not both. This calculator compares the two so you can see which saves more money over the loan.
How the comparison works
Cash back: the rebate lowers the amount you borrow, but you finance at the rate you can get from a bank or credit union.
Low APR: you borrow the full amount, but at the promotional rate.
The calculator works out the monthly payment and total paid for each, then shows the cheaper option.
Worked example
A $35,000 car with $5,000 down offers either $3,000 cash back or 0.9% APR for 60 months. With a 6.5% loan from your bank, the cash back option costs $528.29 a month and the 0.9% offer costs $511.52. Overall, the low APR saves about $1,006.
What tips the balance
| Cash back tends to win when… | Low APR tends to win when… |
|---|---|
| The rebate is large | The rebate is small |
| You can get a low rate elsewhere | Outside rates are high |
| The loan term is short | The loan term is long |
| You plan to pay the loan off early | You will keep the loan to the end |
Before you sign
- Get pre-approved by a bank or credit union so you know your real outside rate.
- Promotional rates usually need excellent credit; confirm you qualify.
- Negotiate the price first, before discussing incentives.
Frequently asked questions
Is 0% financing better than a rebate?
Not always. If the rebate is large or you can borrow cheaply elsewhere, the rebate often costs less overall. Compare the total paid, not just the monthly payment.
Is sales tax charged before or after the rebate?
In many US states, sales tax is charged on the price before the manufacturer rebate, so it is the same with either option. Rules vary by state.
Can I get both the rebate and the low APR?
Usually not; manufacturers make you choose one. Occasionally smaller bonus rebates can be combined, so ask.
What if I pay the loan off early?
Paying off early reduces the value of a low APR, because you pay less interest anyway. That makes the cash back option relatively better.
Does a longer term change the answer?
Yes. The longer the loan, the more interest the low APR saves, so longer terms favor the special rate.
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Sources
Last reviewed: October 2026. This calculator is for education only and is not financial, tax or legal advice.