The Best Car Deals – Low Finance Rates Vs Rebates – Which Should You Choose?

How To Get The Best Car Deals:

Quick tips that will help you at the car dealer:

How to understand Rebates and low financing offers:

Vehicle MSRP: Manufacturers Suggested Retail Price – This price is always negotiable – don’t ever agree to pay MSRP Exception: Some vehicles that might be “hard to find” or “limited in production” might be sold the dealers at MSRP or, sometimes higher. This is usually called Market Adjustment. Manufacturer Rebates: This is your money and has nothing to do with discounts given by the dealership. This money is provided to you directly from the Factory. Never let the Rebate be used as a negotiation tool by the dealer. Any discount or negotiation from the dealer should be separate from any rebates offered.


Low finance rates: 0.00%, 1.00%, 1.9%, etc… These are called Sub-vented rates; they, too, are offered by the Factory and not the dealership. Do not allow a “low” finance rate to be used as part of a negotiation by the dealer. These rates are granted over and above any discounts, rebates, etc. Exceptions: There are several exceptions to Sub-vented finance rates, but here are two that you really should be aware of:

1. Not all people qualify for these rates. So, suppose you suspect that you might have some issue that will cause you not to modify. In that case, there is nothing wrong with expressing to the dealer that the low finance rate is something you are interested in and you would like to apply first before going through the long, timely steps of deal negotiation. Many dealerships will view this as unusual; however, any “good” dealer will gladly let you apply first if you insist. Why is this important? As we always say, knowledge and preparation are the keys to not overpaying at a dealership. What happens if your deal is worked, negotiated, and finalized with the dealer? Then, you head to the finance office to complete the terms and payments… You expected to pay 0.00% interest, then at the last second, you are told: “Sorry” because you don’t qualify…


2. Rebates and “low” finance rates can not always be combined. Some factories allow it sometimes. However, there is no rule; you must do your homework first. For instance, Chrysler offers manufacturers rebates on most of their vehicles and low finance rates on most. Though you, the customer must decide which offer you want, you can’t have both. However, sometimes Chrysler will run special offers that allow you to “combine” the financing and Rebate offers simultaneously. But be careful; dealers won’t always tell you these offers are available; if you are unaware and agree to pay higher finance rates, you are stuck.

Commonly Asked Question: Which is the right choice, Rebate or Low Financing?

This is an interesting question many customers ask; the answer is simple, yet many people have no idea. Remember this rule: You should do what’s best for you; do not ever inquire with a person, dealer, or anyone else with a motive other than what’s best for you. What that means is this: When you ask a dealership which makes more sense, the dealer will likely tell you: “Take the rebate – not the low-interest rate. The reasoning behind this answer is, if you take the rebate, you are paying “less” for the vehicle than if you elected the low-interest rate. So, since the vehicle price is the most important issue, you should always take the Rebate. Is this correct or incorrect?

Rule: Don’t be concerned about what the dealer is making or losing; it’s irrelevant to what’s best for you.

Does the dealership stand to gain more if you choose the Rebate vs. the low finance rate? The answer to that question is yes; the dealership does stand to earn more. They would receive more “reserve money” from the lender if they chose conventional finance rates. The fact is, however, that this point is completely irrelevant. Who cares what the dealership is making? Why is that important anyway? Is there some rule that says a dealership is not entitled to make a profit?

The only person who is doing something wrong in this scenario is you. You’re asking the wrong party for information. If the complete and honest answer might cause the dealer to make less, chances are more than likely the answers will be carefully weighed to fall on their side. Remember: Your concern is getting the best deal; don’t waste time caring about what the dealership makes. Prepare yourself by considering all the facts. Please do not make the common errors of everyone we constantly hear about who overpay Global Amend.

Fact: People who think that dealerships are losing money on them usually pay the most!

Note: Please understand the purpose of this and every other post we write is NOT to condemn dealerships for making a profit. Why should a dealer not be entitled to profit? What right do we have to ask them to lose money? Would you ever go to a restaurant and tell them that you insist they sell you dinner and lose money? It’s a stretch but equally as ridiculous. The purpose of this post is to assist fair people in getting the best deal for themselves. Our motivation is to protect people from being “ripped off” by a deceptive dealership.

We don’t claim that all dealers are unfair or “rip-off artists”; we know that most dealers are honest and forthcoming. Although everyone is in business to make a profit, the topics written about within these posts are fto assist”fair” consumers achieve “fair” and honest deals. Why do we keep mentioning “fair”? Because we are not concerned about a cheating dealership, we have no problem with the “unfair” consumers who want the good dealers to close their businesses and lose money.


As we have mentioned, price is not always the most important issue. The following is the only correct answer to the Rebate vs. low rate debate: With any problem that causes you to make a decision, there are always certain facts in place; those facts make up the “pros and cons”. We weigh the pros and cons of any decision we make and ultimately are led to a conclusion. Then, of course, we hope the decision was right. Remember this rule: There is always a point where the two lines will cross, where you will find the correct answer.

This means that some variables create change in every deal. For example, It may be better for me to take the Rebate, while it is better for you to take the low financing rates. Let’s explain: You might be financing $30,000, and your finance term is 60 months. The Factory offers a $ 3,000 manufacturer rebate or 0.00% for the 60-month finance term. Which do you choose? I might be financing $12,000 – The Factory offers a $ 3,000 refund or 0.00% for the finance term. Which one do I choose? The answers vary; your lines of “break-even” will cross way sooner than mine. The reason is that different factors in the two deals will yield other answers.

Here’s how you figure out the correct answer based on your factors:

For this example, we’ll assume that you are considering a $30,000 car with a $3,000 rebate or a 0% interest rate, and for the sake of finding an answer, we’ll assume that you’re putting $3,000 as a down payment and you qualify for all offers. First: Draw a line down the middle of a paper; on one side, write Rebate. On the other side, write 0%. Second: on the 0% side, note the sale price of $30,000 – and on the left side (Rebate), write in the sale price of $30,000 as well.

  • Third: On both sides, add in your local tax rate. For instance, if you live in Queens, NY, add 8.25% as sales tax.
  • Fourth: on both sides, add $300 – this should cover DMV – Inspection and dealer Doc Fees.
  • Fifth: On both sides – subtract $3,000 from your down payment
  • Sixth: On the Rebate side, deduct $3,000 from the Rebate
  • If you have done this right so far, you should have the following results:
  • Both sides should show a Sale Price of $30,000 and a tax of $2,475. DMV $300. Sub Total: $32,775
  • Rebate Side Should show a $6,000.00 Total down payment and an “unpaid balance” of $26,775.00
  • The 0% side should show a $3,000 Total Down Payment and an “unpaid balance of $29,775.00
  • Assumption: If you chose not to take the 0% – the dealer offered you a 5.5% interest rate.

Compare to see where the lines cross:

Next step – find an auto loan calculator – you can go on any search engine and type in “free auto loan calculator.” I cannot attach a link to this area of the post, so I will suggest a very user-friendly, free calculator (with which we have no affiliation), Chase. Com search: Free pursuit auto loan calculator


  • $26,775 Amount Financed
  • 5.5% APR
  • 60 Month Term
  • Answer: Payment $511.43
  • Total Interest: $3,910.80
  • Total of Payments: $30,685.00
  • 0% SIDE
  • $29,775.00 Amount Financed
  • 0% APR
  • Answer: Payment $496.25
  • Total of Payments: $29,775.00

Summary: On your deal, 0% was $910.80 less than the REBATE, so the better deal for you is 0%. Using the same method on my worksheet, it turned out that the Rebate was quite a bit more savings (only because I was financing much less). If I chose to invest more money, perhaps the lines would cross sooner.

Final notes to remember:

1) If you choose to lower or raise your down payment and lower and raise your Amount financed, the outcome of “which one” is a better deal will vary. So, keep testing the different scenarios using the above method, and you will find the best deal. Every time!

2) Be careful – No rebate is final, while low financing isn’t. Remember this very important consideration: If you choose low financing over the Rebate, you just paid more for the vehicle and can’t get that money back. However, you decided to do so in return for free financing terms. (Very smart) You did your homework, yade your decision based on solid factors, and made the overall least expensive decision. EXCELLENT WORK! Itt would help if you remembered you made this comparison based on a 5-year repayment term. If you keep the vehicle for five years and pay as expected, you win, your calculations are perfect, and you achieve the best deal for yourself.

On the other hand, if something changes and for any reason you decide not to keep this vehicle beyond the second or third year... Then, you just gave back the benefit of the low financing. The variables have changed again, and the better deal returns to the Rebate. So remember, in your home’s privacy, non-pressure environment, carefully consider all your options and likelihoods. For instance, if you know you won’t keep a vehicle for a couple of years, this must be considered a decision. To make a story short, Always compile all the facts first, limit the variables that can change the deal, and negotiate confidently.

The author of this article has been an auto industry professional for the past 18 years. Robert has extensive knowledge in automotive finance and specialty automotive finance (bad credit). Having worked as a finance and special finance manager for New York’s dealerships since the early 90s, Robert has assisted thousands of clients in achieving automobile loans with “less than perfect” credit since 2009.

Robert has been working on a program to assist customers with the often confusing issues related to automobile purchasing. A free service: [] assists clients with good or bad credit. The BuyerCents program helps people understand the “pitfalls” they should avoid while also assisting with the general do’s and don’ts that cause many people to overpay or get ripped off at the dealership.

Roberto Brock
the authorRoberto Brock
Snowboarder, traveler, DJ, Swiss design-head and HTML & CSS lover. Doing at the nexus of art and purpose to develop visual solutions that inform and persuade. I'm a designer and this is my work. Introvert. Coffee evangelist. Web buff. Extreme twitter advocate. Avid reader. Troublemaker.