Cash Back or Low Interest Calculator
$
$
6.00%
1.90%
5 yrs
Best OptionLow Interest
Cash Back Total$32,479.11
Low Interest Total$31,471.29
Savings$1,007.82
- Cash Back
- Low Interest
Car dealers often let you pick one incentive but not both: a cash-back rebate that lowers the amount you finance, or a promotional low interest rate on the full price. This calculator finances both scenarios over the same term and adds up every payment so you can see which offer costs less in total dollars. It then names the cheaper choice and shows exactly how much you save by taking it.
Formula
Total = M × n, where M = P · r(1+r)^n / ((1+r)^n − 1)
- P
- Financed amount: price − rebate for cash-back, full price for low-interest
- r
- Monthly rate = the path’s annual rate ÷ 12 ÷ 100
- n
- Number of payments = term in years × 12
- M
- Monthly payment; Total is M multiplied across all n payments
How it works
- Enter the vehicle price, the cash-back rebate amount, the normal financing rate that comes with the rebate, the promotional low rate, and the loan term in years.
- For the cash-back path it finances (price − rebate) at the normal rate; for the low-interest path it finances the full price at the promotional rate. Both use the standard fixed-rate loan payment formula.
- Each monthly payment is multiplied by the number of months to get a total cost, the two totals are compared, and the option with the lower total is flagged along with the dollar difference.
Worked example
A $30,000 car with a $3,000 rebate at a 7% normal rate, versus 1.9% promotional financing on the full price, over 5 years.
- Cash-back path: finance 30,000 − 3,000 = $27,000 at 7% for 60 months → total ≈ $32,077.94.
- Low-interest path: finance the full $30,000 at 1.9% for 60 months → total ≈ $31,471.29.
- Difference: 32,077.94 − 31,471.29 = $606.66 in favour of the low-rate offer.
The low-interest deal is cheaper here, saving about $606.66 over the life of the loan.
Frequently asked questions
- Which offer is better, cash back or low interest?
- It depends on the numbers. A large rebate paired with a high rate can still beat a small rate cut, and vice versa. This tool finances both over the same term and compares total dollars paid so you do not have to guess.
- Does the comparison include a down payment or trade-in?
- No. It compares the financed cost of the vehicle price (less any rebate on the cash-back path) at each rate. Apply a down payment or trade-in to the price first if you want to factor those in.
- Why does a longer term sometimes flip the answer?
- A longer term spreads the rate difference over more payments, which magnifies the value of a lower rate, while a fixed rebate stays the same size. That can make low-rate financing win over long terms even when a rebate wins over short ones.
- Are taxes and fees included?
- No. The calculation uses the price, rebate, and rates you enter. Sales tax, registration, and dealer fees are not modelled, so add them to the price beforehand for a more complete picture.