0% APR or the cash rebate?

Manufacturers routinely make you pick: special financing (0–2.9% APR) or a cash rebate ($2,000–5,000 off), not both. The intuition says free money beats free financing is wrong surprisingly often — here's the actual comparison.

The 60-second method

1. Run the calculator with the rebate applied and your bank/credit union's real APR offer
2. Run it again with no rebate at the promotional APR
3. Compare "total cost" — not the monthly payment

A worked example

$30,000 car, 60 months. Option A: 0% APR, no rebate — total cost $30,000. Option B: $3,000 rebate, financing $27,000 at 7% — total interest about $5,070, total cost roughly $32,070. Here 0% wins by ~$2,000. But flip the numbers — a $5,000 rebate and a 5.5% credit-union rate — and the rebate side gets very close, and wins outright on shorter terms or bigger down payments.

Rules of thumb

• Big rebate + good outside financing rate → rebate usually wins
• Small rebate + high market rates → 0% usually wins
• Shorter loans favor the rebate (less time for interest to accumulate); longer loans favor 0%
• In many states the rebate also reduces taxable price — a bonus the 0% side never gets

One warning: the 0% offers are typically reserved for top-tier credit. If you don't qualify, the choice makes itself — take the rebate and your best outside rate.

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