How this number is made
Dealers sometimes offer a rebate or a cheap rate, not both. The rebate lowers the amount financed at the higher rate. The cheap rate finances the whole price. The better deal is the one with less total paid, unless you care more about the monthly payment.
- Price to finance is after the down payment and the trade, before the rebate.
- Confirm the rebate is lost if you take the promotional rate. Sometimes it is not.
Formula
Rebate loan finances price − rebate at the higher rate. Promo loan finances the full price at the low rate. Compare total paid.
Worked example
With the figures already in the form, promo rate costs this much more in total is -$1,143.
Questions
What if I sell the car early?
The loan with less interest up front can win even if its total is higher, because you will not pay the later interest. This page assumes you keep the loan for the whole term.
Is the rebate taxable?
A purchase rebate usually lowers the price rather than arriving as income. This page treats it as a smaller amount financed.