Should You Take the Rebate or the Auto Financing?

Should You Take the Rebate or the Auto Financing?


If you’re planning to buy a new car, more than likely the dealer will offer you some sort of incentive to help persuade you to buy. Incentives usually always include a cash back rebate which you can apply to your down payment or low-rate financing which can lower your monthly financing payments. Usually, both options are offered.

Paying cash for the car means you’ll take the rebate. However, for everyone else the two options should be carefully weighed to help you find the best option. Read on and we’ll explore how to arrive at the right decision.

Cash Rebates

New car incentives vary widely from manufacturer to manufacturer and from model to model. Even if a rebate isn’t offered up front, there may be some you’re eligible to take. These include recent college graduate, member of the armed forces and loyalty rebates for current owners of the brand. Ask your sales associate about other rebates and special incentives not mentioned. You may be able to combine two or more rebates as well.

Auto Financing

Financing at the dealer level is usually a good deal, especially if the interest rate you are being charged is lower than what you can get at your bank or credit union. Keep in mind that these rates vary based on your creditworthiness, therefore make sure that your credit reports are clean and that your credit score is relatively high before applying. Auto financing should offer you a low fixed rate for the length of the loan and include no prepayment penalties in the event you want to pay off your loan sooner.


If the manufacturer is offering rebates and auto financing, then your decision is easy — take both! Of course, few are doing both these days because the automakers are keeping the reins on production tight and don’t have to give away money to get you to buy.

Your decision can be made easier by using financial calculators as offered by which allow you to plug in key data such as the purchase price, down payment, trade-in value, loan terms, rebate amount and more. Yes, you will be reviewing complicated formulas, so take your time and play with the numbers. Ultimately, you should be able to see a clear difference between the two which will make your decision easier to make and financially rewarding.

Adv. — If you’re looking for low rate financing, please visit to compare rates on your home, car or personal loan.

Photo Credit: Michal Ufniak


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Categories: Consumer Financing

About Author

Matthew C. Keegan

Matt Keegan is a freelance writer and editor as well as publisher of "Matt's Musings", his personal blog. Matt covers campus, consumer, business and financial topics on various websites and blogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".