Cash Back vs Low Interest Auto Loan Calculator

Cash Back vs. Low Interest Rate Calculator

Auto manufacturers may offer either a cash back rebate or a low interest rate with a car purchase. Use this calculator to find out which offer saves you more money.

Cash Back Offer

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Low Interest Rate Offer

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Other Information

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Cash Rebate

A vehicle cash rebate is an additional deduction on the purchase price of a car. The amounts generally range between a few hundred to a few thousand dollars.

Several states in the U.S. view cash rebates as payments from auto manufacturers. For example, the purchase of a vehicle at $30,000 with a cash rebate of $2,000 will have sales tax calculated based on $30,000, not $28,000.

Low-Interest Financing

When car buyers receive more favorable interest rates than usual on their car purchases, this is called low-interest financing. A car loan at a lower rate will require the car buyer to pay less in interest during the life of the loan.

Low-interest financing is generally reserved for a select few with excellent credit scores. Buyers who have negative marks in their credit history may not qualify for low-interest financing.

Which One to Choose?

Both options reduce the total cost of owning a car, just by different methods. Generally, it comes down to which amount is higher: the rebate amount or the total interest saved from the low introductory rate.

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More popular and related calculator:1) Auto Loan Calculator – Estimate Payments, 2) Auto Loan Calculator – Estimate Payments

How to Use Cash Back vs Low Interest Car Loan Savings Calculator

1. Enter Cash Back Offer Details

  • Cash Back Amount: Enter the rebate amount offered by the dealer (e.g., $1,000).
  • High Interest Rate: Input the standard (non-promotional) loan rate (e.g., 5.5%).

2. Enter Low Interest Offer Details

  • Low Interest Rate: Input the special financing rate (e.g., 2.5%).

3. Fill in Other Loan Information

  • Auto Price: Total vehicle price before rebates/trade-ins.
  • Loan Term: Months for repayment (e.g., 60).
  • Down Payment: Your upfront payment.
  • Trade-in Value: Your current car’s trade-in value (if applicable).
  • State: Select your state (for tax calculations).
  • Sales Tax: Auto-filled based on state, but editable.
  • Title/Registration Fees: Estimated fees (default: $500).

4. Click “Calculate”

  • Instantly compares both offers side-by-side.
  • Shows which option saves you more money.
  • Displays monthly payments, total interest, and overall cost.

5. Review Results

  • Green Highlighting: Indicates the better deal.
  • Detailed Breakdown:
    • Total loan amount
    • Upfront costs
    • Monthly payments
    • Total interest paid
    • Total Cost (price + interest + taxes/fees).

6. Save or Reset

  • Save: Stores your calculation locally for future reference.
  • Reset: Clears all fields to start over.

FAQs: Cash Back vs. Low Interest Auto Loan Calculator

1. Which is better: cash back or a low interest rate?

It depends on your loan amount, term, and the rebate size. This calculator compares both options instantly—showing which saves you more money overall.

2. Are cash rebates taxed?

✅ Taxed in most states: Rebates reduce the car price after sales tax.
❌ Not taxed in: AK, AZ, DE, IA, KS, KY, LA, MA, MN, MO, MT, NE, NH, OK, OR, PA, RI, TX, UT, VT, WY.

3. Can I combine cash back and low interest?

⚠️ Rarely. Most manufacturers require you to choose one offer. Check dealer terms.

4. What’s a “good” low interest rate for a car loan?

  • 2024 averages:
    • New cars: 3–5% (promotional rates: 0–2.9%).
    • Used cars: 5–9%.
      Tip: Compare with bank/credit union rates first!

5. Why does my state matter?

Sales tax rules vary. Some states tax the full price before rebates, increasing your total cost.

6. How accurate are the results?

✔️ Precise for standard loans (fixed rates, full-term promotions).
❌ Not for:

  • Adjustable-rate loans.
  • Short-term “teaser” rates (e.g., 0% for 12 months only).

7. Should I put more down payment to qualify for low APR?

Often yes. Lenders may require:

  • Higher credit scores (720+).
  • Larger down payments (10–20%).

8. How do I save/print my results?

Click “[Save this calculation]” to store it in your browser. For printing, use your browser’s print function (Ctrl+P/Cmd+P).

9. Can I use this for used cars or leases?

✅ Used cars: Yes (input the used car price).
❌ Leases: No—use a Lease Calculator instead.

10. What if my loan term is longer than 8 years (96 months)?

⚠️ Caution: Extremely long terms mean more interest paid. The calculator maxes at 96 months for realism.

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