Cash back or low interest calculator
Decide whether a cash rebate or a low-rate dealer loan is cheaper on a car purchase.
About the cash back or low interest calculator
Decide whether a cash rebate or a low-rate dealer loan is cheaper on a car purchase.
Part of SmartCalcy’s auto & leasing tools. It runs in your browser with no account, uses your own currency and units (change them at the top of the page), and gives estimates for information only, so check official guidance before you rely on a result.
How to use the cash back or low interest calculator
What it calculates and when to use it
Decide whether to take a dealer’s cash rebate and finance elsewhere, or take the dealer’s low-interest finance and give up the rebate.
How to use it, step by step
- Enter the car price, deposit and term.
- Enter the rebate amount and the loan rate you would get from your own lender.
- Enter the dealer’s low rate that applies only without the rebate.
- Compare the total paid under each option and the break-even rate.
What each input means
- Rebate – Cash off the price if you do not use dealer finance.
- Your own loan rate – The rate from your bank or credit union.
- Dealer low rate – The special rate that replaces the rebate.
How to read the results
- Savings – How much cheaper the better option is over the loan.
- Break-even dealer rate – The low rate at which both options cost the same.
The formula
Rebate option: loan = price + tax − deposit − rebate, paid at your own rate. Low-rate option: loan = price + tax − deposit, paid at the dealer rate. Each total is payment × months, with payment = L × r ÷ (1 − (1 + r)^−n). The break-even rate is solved numerically.
A worked example
A 30,000 car with 3,000 down over 60 months. Taking a 2,500 rebate with your own 7.5% loan costs 29,456 in total; the dealer’s 1.9% loan with no rebate costs 28,324. The low-rate option wins by 1,131.63, and the break-even dealer rate is 3.48%.
Assumptions and limits
- The same term for both loans.
- Sales tax is charged before the rebate.
- Your own loan rate depends on your credit.
Common mistakes
- Choosing the rebate because cash feels better today without comparing total interest.
- Not checking your own loan rate beforehand.
Frequently asked questions
Which is usually better?
The lower the dealer’s rate compared with your own, and the longer the term, the more the low rate is worth.
Related tools
Details
- Rebate option: loan
- £24,500.00£490.93 a month at 7.5%
- Rebate option: total paid
- £29,455.78
- Low-rate option: loan
- £27,000.00£472.07 a month at 1.9%
- Low-rate option: total paid
- £28,324.16
- Break-even dealer rate
- 3.48%the low rate at which both cost the same