Cash Back or Low Interest Calculator
Compare taking a cash back rebate with a standard loan rate against a low promotional interest rate to see which saves more over the loan term.
Better option
Low Interest Financing
What Your Result Means
This compares the total cost of financing the vehicle two ways: taking the cash back rebate (which reduces the amount financed but uses the standard rate) versus skipping the rebate for a lower promotional rate. The option with the lower total cost is the better deal financially.
How It Is Calculated
Total Cost = Monthly Payment × Number of Payments, compared across both scenarios
Worked Example
On a $35,000 vehicle, $2,000 cash back with a 7.5% rate costs about $39,800 total over 5 years, while a 2.9% promotional rate with no cash back costs about $37,600 - making the low-rate option the better deal by roughly $2,200.
Important Assumptions
- Assumes the same loan term for both options - dealer promotional rates sometimes require shorter terms.
- Doesn't account for how you might invest the cash back rebate elsewhere.
Frequently Asked Questions
- When does cash back usually win?
- Cash back tends to be the better deal when the gap between the standard and promotional rates is small, or when the loan term is short.
- When does low interest usually win?
- Low promotional rates tend to win on larger loan amounts, longer terms, or when the promotional rate is dramatically lower than the standard rate.
Related Calculators
Methodology
This calculator uses the standard amortizing loan formula applied to both financing scenarios. See our methodology page for details.
This calculator provides estimates for educational purposes only. Actual rates, taxes, insurance, fees, and lender terms may differ. It does not constitute financial advice - consult a qualified financial professional before making financial decisions.