A worked example
On a $30,000 vehicle over 5 years, a $1,500 cash-back offer at 6.5% APR costs about $33,460 in total, while a 1.9% promotional rate with no cash back costs about $31,470 — making the low-interest offer almost $2,000 cheaper overall, despite having no upfront rebate.
Frequently asked questions
Why doesn't cash back always win — isn't free money always better?
The rebate is a one-time reduction in price, while the interest rate difference compounds over every month of the loan. On a large loan amount or a long term, a low promotional rate can save more in total than the rebate is worth — and vice versa for smaller loans or shorter terms.
Can I negotiate the price down and still get the low-interest offer?
Often yes, in principle — but dealers sometimes informally resist giving their best negotiated price alongside the lowest promotional rate. It's worth asking directly and getting any agreement in writing before assuming both apply.
What if I'm paying cash and don't need financing at all?
Then the comparison doesn't apply the same way — a cash-back rebate is straightforwardly worth taking since you're not financing at any rate, low or otherwise. This calculator is for the financing-vs-financing decision specifically.
This calculator provides estimates for general informational purposes only and is not financial advice. Actual offers, terms and eligibility vary by manufacturer, lender and credit profile.