REBATE or LOW APR?

When buying a new vehicle there are several choices you have when it comes to financing. Depending on the make and model of the vehicle, the manufacture may offer special incentives such as a rebate or a low APR (annual percentage rate) option. Sometimes they may even combine the two. Make sure you are up to date on what is available before you start your buying process. Some incentives may only be available for a limited time and not getting certain incentives could cost you thousands of dollars.

If you are offered a low APR, more than likely you will have to give up what ever rebate may be available on that particular model, in this case it may not be the best financing option for you. Make sure you look at each option side by side comparing interest saved vs. total rebate given up. Before you can do this you need to know what percentage rate you would be given if you chose to take the rebate. For instance, if you were buying a vehicle and was given the option of taking 5.9% APR with a $3000.00 rebate, financing $20,000 or no rebate with a 1.9% APR, financing $23,000 both based on 60 months, you would save more money by taking the rebate. Example below.

Remember one thing before making the decision to take a special APR. If you have a short trade cycle and plan on trading your vehicle before it is paid off, then there again it may be better for you to take the rebate. By taking the rebate you gain equity up front, making it easier to trade a few years.