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


The Best Car Deals – Low Finance Rates Vs. Rebates – Which Should You Choose? Understanding Rebates and low financing offers Vehicle MSRP: Manufacturers Suggested Retail Price – This price is always negotiable – don’t ever agree to pay MSRP Icas Network.

Exception: Some vehicles that might be “hard to find” or “limited in production” might be sold by the dealers at MSRP or, sometimes, higher. This is usually called Market Adjustment.

Car Deals

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 telling the dealer that the low finance rate is something you are interested in and you would like to apply for it 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 you are told: “Sorry” because you don’t qualify… NOT GOOD THE WHOLE DEAL CHANGES.

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 vehicles. 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 offer simultaneously. But be careful; dealers won’t always tell you these offers are available. You are stuck if you are unaware and agree to pay higher finance rates.

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. 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.” remember this rule: You should do what’s best for you, do not ever inquire with a person, dealer, or anyone else that has any other motive than what’s best for you.

The reasoning behind this answer is that if you take the Rebate, you pay “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 worry 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. If you choose conventional finance rates, they receive more in “reserve money” from the lender. 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.

Fact: People who think dealerships are losing money on them usually pay the most!; prepare yourself by considering all the facts. Please do not make the common errors of all the people we constantly hear about who overpay all the time. Remember: Your concern is getting the best deal; don’t waste time caring about what the dealership makes.

Note: Please understand this purpose, 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 in these posts are to assist “fair” consumers in achieving “fair” and honest deals. Why do we keep mentioning “fair”? Because we are not concerned about a cheating dealership, we also 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 decide, 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 and 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; your finance term is 60 months. The Factory offers a $3000 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 $3000 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 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, write in the sale price of $30,000; on the left side (Rebate), write in the sale price of $30,000. 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, add $300 on both sides – this should cover DMV – Inspection and Dealer Doc Fees. Fifth: On both sides – subtract $3,000 for 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 Sale Price $30,000 Tax $2,475. DMV $300. Sub Total: The $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:

The next step is to find an auto loan calculator. You can search 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), which is Search: “Free Chase 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% came out to be $910.80 less than the REBATE, so obviously, the better deal for you is 0%. Using the same method, my worksheet showed that the Rebate was much 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:

Every time! 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.

2) Be careful – No rebate is final, while low financing isn’t. Remember this significant 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, selected based on solid factors, and made the overall least expensive decision. EXCELLENT WORK! However, it 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 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, carefully consider all your options and likelihoods in your home’s private, non-pressured environment. For instance, if you know you won’t keep a vehicle for a few years, this must be included as a decision factor.

Long 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 obtaining 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 additionally assisting with the general do’s and don’ts that cause many people to overpay or get ripped off at the dealership.