Auto Loan Rebate Vs 0% Dealer Financing – Which Do You Prefer and Why?

Auto Loan Rebate Vs 0% Dealer Financing – Which Do You Prefer and Why?

If you are thinking of purchasing a new vehicle, you may be confused and frustrated when faced with deciding between a manufacturer’s rebate and 0% financing. Despite the fact that 0% financing seems more appealing than the former, there is no denying the tremendous appeal of using a manufacturer’s rebate as a down payment in combination with a low-interest rate auto loan from your local bank or credit union. Moreover, another benefit of taking the manufacturer’s rebate is that it builds a stronger equity position in a car (as opposed to 0% financing). The end result is the manufacturer’s rebate affords you with the opportunity to be more flexible when trading a car early, because you will owe significantly less on your current auto loan.

The first and most important thing on which you must always focus, when it comes to comparing financing options, is to ALWAYS review the numbers in detail. Also remember that the determining factor is not whether or not you have to decide between a manufacturer’s rebate and 0% financing. If you were an expert auto dealer, you would not be reading this article. Don’t let the former or the latter be the only determining factor for you. The determining factor for you depends on the listed interest rates available for financing, the price of the vehicle and the amount of the manufacturer’s rebate. Often times, you will fare better by choosing to obtain a competitive bank or credit union auto loan, coupled with taking the manufacturer’s rebate.

Which funding option is right for you?

Examine the chart below to determine how financing a new car, truck or SUV at a participating local bank or credit union may reduce your monthly payments and save you money over the life of your auto loan.

Financing through an Auto Dealer

Loan Terms: 36 Months
Best Negotiated Purchase Price on Vehicle: $18,000.00
Manufacturer’s Rebate Applied to Down Payment: None
Amount Financed: $18,000.00
Finance Charge: $0.00
Annual Percentage Rate (APR): 0.00%
Monthly Payment: $500.00
Total of 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 Vehicle: $18,000.00
Manufacturer’s Rebate Applied to Down Payment: $2,500.00
Amount Financed: $15,500.00
Finance Charge: $1,538.72
Annual Percentage Rate (APR): 6.25%
Monthly Payment: $473.30
Total of Payments: $17,038.72
You Save: $961.28

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