If you are considering buying a new vehicle, you may be confused and frustrated having to decide between a manufacturer rebate and 0% financing. Even though 0% financing seems more attractive than the first, there is no denying the tremendous appeal of using a manufacturer rebate as a down payment in combination with a low interest rate car loan from your bank or credit union. local credit. Also, another benefit of accepting manufacturer rebate is that it creates a stronger equity position in a car (as opposed to 0% financing). The bottom line is that the manufacturer’s rebate gives you the opportunity to be more flexible when trading a car early, because you’ll owe significantly less on your current car loan.
The first and foremost thing you should always focus on, when it comes to comparing financing options, is ALWAYS review the numbers in detail. Also remember that the determining factor is not whether or not you have to decide between a manufacturer rebate and 0% financing. If you were a savvy car dealer, you wouldn’t be reading this article. Don’t let the first or last be the only determining factor for you. The determining factor for you depends on the interest rates available for financing, the price of the vehicle, and the amount of the manufacturer’s rebate. Often times, you’ll be better off opting for a competitive auto loan from a bank or credit union, along with a manufacturer’s rebate.
Which financing option is right for you?
Take a look at the chart below to determine how financing a new car, truck, or SUV at a local bank or participating credit union can lower your monthly payments and save you money over the life of your auto loan.
Financing through a car dealer
- Loan terms: 36 months
- Best negotiated purchase price on the vehicle: $ 18,000.00
- Manufacturer’s rebate applied to down payment: Neither
- Financed amount: $ 18,000.00
- Finance charge: $ 0.00
- Annual Percentage Rate (APR): 0.00%
- Monthly payment: $ 500.00
- Total payments: $ 18,000.00
- You save: $ 0.00
Financing through a local bank or credit union (option # 1)
- Loan terms: 36 months
- Best negotiated purchase price on the vehicle: $ 18,000.00
- Manufacturer’s rebate applied to down payment: $ 2,500.00
- Financed amount: $ 15,500.00
- Finance charge: $ 1,538.72
- Annual Percentage Rate (APR): 6.25%
- Monthly payment: $ 473.30
- Total payments: $ 17,038.72
- You save: $ 961.28
Financing through a local bank or credit union (option # 2)
- Loan terms: 48 months
- Best negotiated purchase price on the vehicle: $ 18,000.00
- Manufacturer’s rebate applied to down payment: $ 2,500.00
- Financed amount: $ 15,500.00
- Finance charge: $ 2,058.27
- Annual Percentage Rate (APR): 6.25%
- Monthly payment: $ 365.80
- Total payments: $ 17,558.27
- You save: $ 441.73
(Warning: You should read the fine print and all disclosures, stating the terms of the vehicle sale. Rates are determined by a number of factors: amount financed, loan term, and credit history. Contact your bank or credit union for more information. Some restrictions apply. Rates subject to change. Auto loans from a bank and a credit union are consumer loans of indefinite duration and the term is provided as an example to help you calculate payment terms. All calculated payments are based on 30-day payment intervals.)
Who can afford to overpay on their next and future vehicle purchases? As a smart shopper, you realize that no rational person is willing to overpay for a car, truck, or SUV. Perhaps you have intended to compare rates, but you just haven’t …
Well, stop wasting time. You could start saving money. To buy a car below car dealer costs, you need to research the bargaining tactics of smart car buyers and get the invoice price of the vehicle you deserve.
