Cash Back or Low Interest Calculator Decide between manufacturer rebates and promotional financing — with 2025 rates, bre...
Cash Back or Low Interest Calculator
Decide between manufacturer rebates and promotional financing — with 2025 rates, break-even analysis, and refinance strategies.
Low APR Total Cost** = Loan Amount + Interest at Promotional Rate
Cash Back Total Cost** = (Loan Amount − Cash Back) + Interest at Market Rate
Example** ($35K car, $5K down, $30K loan, 60 mos): • **0.9% APR**: $30,000 × (0.009/12)(1+0.009/12)60 / [(1+0.009/12)60−1] = **$512/mo** → $30,720 total • **$5,000 cash back + 7.2% market**: $25,000 loan → **$491/mo** → $29,460 + $5,000 rebate = **$34,460 effective** → **Cash back saves $3,740** vs. low APR
✅ Pro Tip**: Always compare *total cost*, not just monthly payment — low APR deals often include MSRP markup.
⚠️ Avoid these dealer tactics:
- MSRP inflation** — “0.9%” deal includes $2,000 markup vs. cash back price
- Yo-yo financing** — “Approved!” → call back: “Need $3K more down or higher rate”
- Hidden fees in cash back** — “$7,500 rebate” but requires $1,500 extended warranty
- Term extension** — Cash back deal stretched to 72+ mos → more interest
✅ Smart Buyer Strategies**:
- Get **credit union pre-approval** before dealership visit
- Ask for **“out-the-door” price** for *both* options
- Take cash back + refinance at market rate → best net cost
| Deal | 60-Mo Total Cost | Savings vs. Low APR |
|---|---|---|
| 1.9% APR | $31,450 | — |
| $3K Cash Back + 7.2% | $32,460 | −$1,010 |
| $5K Cash Back + 7.2% | $34,460 | +$3,740 |
| $7.5K Cash Back + 6.5% | $37,120 | +$5,670 |
📉 Break-Even Timeline**:
- $3K rebate vs. 1.9%: **32 months**
- $5K rebate vs. 0.9%: **38 months**
- $7.5K rebate vs. 0%: **44 months**
🚗 Keep car > 4 years? **Cash back almost always wins.**
➡️ Cash Back vs. Low APR
“$35K car, $5K down, 0.9% vs. $5K cash back @ 7.2% — which is cheaper?” (Cash back saves $3,740)
➡️ Break-Even
See how many months until cash back pays off — plan trade-in timing.
➡️ Refinance After Cash Back
“Take $7.5K rebate, then refinance at 6.5% CU rate” → net savings.
Note: Uses exact amortization math. Assumes no fees, fixed rates, on-time payments.