Auto Rebate vs. Low Interest Financing

A rebate will reduce your auto loan balance, while low interest financing lowers your monthly payment. The best option depends on the price of the vehicle, the size of the rebate and the interest rates available for financing.

Definitions:

Low interest financing (for example, 0% financing)

The incentive interest rate you may be able to receive from an auto manufacturer. Most manufacturers allow you to choose either low interest financing or a manufacturer rebate, but not both. This calculator assumes that if you choose low interest financing you are not eligible for any manufacturer rebate.

Manufacturer rebate

A cash rebate paid by the auto manufacturer to you when you purchase a new vehicle. Most manufacturers allow you to choose either low interest financing or a manufacturer rebate, but not both.

Traditional financing (Think's interest rate)

The interest rate you may be able to receive from a lender. This is usually a higher interest rate than the manufacturer's low interest financing, but is often very competitive when used in combination with a manufacturer rebate. This calculator assumes that if you choose a manufacturer rebate you are not eligible for manufacturer low interest financing.

Total purchase price (before tax)

Includes cost of the vehicle, options, and destination charges. Sales tax will be calculated for you and included in your total after tax price.

Term in months

Number of months for your auto loan.

Cash down

Total amount of cash used in this purchase. Larger down payments will lower your monthly payment because you can borrow less money.

Trade allowance

The total amount that you are given for any automobile that you trade-in as part of this purchase. In some states a trade-in can also reduce the amount of sales tax you will owe.

Amount owed on trade

Total loan balance still outstanding on the trade-in.

Sales tax rate

Sales tax percentage rate charged on this purchase.

No sales tax deduction for trade-in

If you live in a state where your sales tax is calculated on your full purchase price check this box. If this box is unchecked sales tax is calculated on the purchase price less trade-in. Currently California, the District of Columbia, Hawaii, Maryland and Michigan allow no deductions for trade-ins when calculating sales tax. In addition, Alaska, Delaware, Montana, New Hampshire, and Oregon have no sales tax on autos.

Calculate sales tax before rebate

Some states will calculate sales tax on your purchase price before a manufacturer's rebate is applied. If your state calculates sales tax on the vehicle price before the rebate is applied, check this box.

Information and interactive calculators are made available to you as self-help tools for your independent use. We can not and do not guarantee their accuracy or their applicability to your circumstances. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

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