AutoMath
Financing

0% APR vs Cash Rebate Calculator

The classic dealer dilemma. Compares the total cost of taking the 0% promo on the full price against taking the rebate cash and financing the smaller balance at your real APR.

Your numbersSaved on this device only
🏷️ Take the 0% APR — saves

$2,928

0% APR: $583.33/mo · Rebate + market: $632.13/mo

0% promo wins on these numbers
The interest avoided by 0% exceeds the rebate. Take the promo APR; the rebate isn't enough to compensate.
Total — 0% APR
$35,000
Total — rebate
$37,928(price − rebate) + interest
Interest — rebate path
$5,928
Break-even rebate
$5,928≈ interest you'd pay at market APR

What this computes

Manufacturers usually force a choice: take the 0% promo on the full price OR pocket a cash rebate and finance the rest at your real APR. Salespeople present them like obvious equivalents. They're not — which one is cheaper is a specific arithmetic question with one right answer for any given price, rebate, APR, and term.

The math

Option A — 0% APR:
  total = price                        (no interest)

Option B — rebate + market APR:
  financed = price − rebate
  interest = monthly·n − financed     (at market APR)
  total    = (price − rebate) + interest

Take B when rebate > interest. Equivalently, B saves
(rebate − interest) cash dollars vs the promo.

The break-even rebate is just the interest you'd pay at the market APR on the rebate-shrunk loan. If the rebate exceeds that figure, the rebate path is cheaper.

"0% APR" is only free if the rebate isn't worth more than the interest you'd otherwise pay. Sometimes it is.

How to use this

  1. Use a real market APR. An outside pre-approval from a bank or credit union, not the dealer's first quote.
  2. Match the term in both paths. A 0%/60-mo promo vs market-APR/72-mo isn't apples-to-apples; equalize.
  3. Run a few rebate sizes. Manufacturer rebates are negotiable; see what break-even rebate would flip the choice.
  4. Consider cash. If you have it, paying (price − rebate) cash beats both options — see the FAQ.

The dealer's trap

Three subtle things make 0% APR feel better than it is:

  • "You save the interest!" Yes — but you also gave up the rebate, which may be worth more.
  • Promo terms are short. 0% is often on 36-48 months only; the resulting monthly may be unaffordable even though the total is OK.
  • You can't combine. The choice is forced; people who don't realize this assume both are stackable.

What this calculator doesn't model

  • Dealer financing markup. Some "market APR" quotes are inflated; use an outside pre-approval.
  • Add-ons rolled into the loan. Extended warranties etc. apply to both paths; not modeled.
  • State / manufacturer-specific tax effects of the rebate. A few states treat rebates differently for sales-tax purposes; this assumes the rebate simply reduces the financed amount.

Frequently asked questions

How do I choose between 0% APR and a cash rebate? +
Compare total cash out the door under each path. 0% APR on the full price totals exactly the price (zero interest). The rebate path shrinks the financed amount by the rebate but adds market-APR interest on what's left. Whichever total is smaller wins — and that depends on the rebate size, your market APR, and the term.
When does the rebate beat the 0% promo? +
When the rebate is bigger than the interest you'd otherwise pay on the rebate-shrunk loan at your real APR. Roughly: a $3,000 rebate beats a 0% promo when the interest on (price − 3000) over the term at your APR is less than $3,000. The calculator does this directly — if it says 'take the rebate,' the rebate exceeds that interest.
What if I can't get 0% APR (subprime credit)? +
Then it's a non-choice — you take the rebate and finance at whatever APR you qualify for. 0% promos typically require excellent credit (760+). The calculator's purpose is for buyers who actually qualify for both and have to pick.
Should I take the rebate and pay cash instead? +
Yes, when feasible — paying cash on (price − rebate) is the cheapest of all options (no interest, no opportunity cost on financing). The calculator's 'rebate' option assumes you finance the remainder; cash is even better if you have it without sacrificing liquidity.
Does the term affect the choice? +
Yes. A longer term means more interest on the rebate-path loan, which makes 0% APR relatively better. A shorter term means less interest, which makes the rebate relatively better. Run multiple terms in the calculator.
Is this financial advice? +
No. AutoMath is an educational tool. The output depends entirely on the price, rebate, APR, and term you enter. Confirm the actual promo terms with the dealer and your APR with an outside lender before signing.

Related calculators

AutoMath is an educational tool. The numbers above depend entirely on assumptions you provide and are not financial advice.