Archive for the ‘auto loan incentives’ Category

Auto Loan Incentives: Should You Do Zero Interest or a Rebate

Thursday, April 29th, 2010

When looking for an , make sure you are getting the best incentives as possible. One of the most popular auto loan incentives many car dealerships offer is either zero percent interest or a rebate. Sometimes it’s better to go with the zero percent interest, while other times the rebate will save you more money. Understanding how each one saves you money will help you decide.

Zero Percent Interest Vs. Rebate

When you sit down with an auto loan lender, ask to use a calculator. You’ll need it to decide which auto loan incentive will save you the most money.

If you’re offered zero percent interest, find out from the lender how much your interest rate would be if you decided not to take this incentive. Then calculate how much you will save on your monthly car payment and how much you will save over the course of the loan.

To decide if you should take the rebate, take the total savings from the zero percent interest and compare it to the rebate. Choose the rebate if it’s more than your savings from not having to pay interest.

Here’s an example:

Let’s say you want to buy a car that is 20,000 dollars. The interest rate will be 5 percent if you do not select the zero percent interest. If you have a 36-month term, you would pay approximately 599 dollars a month. With no interest, you would pay about 555. That is a savings of 44 dollars each month and over the course of 36 months it would be a total savings of 1584. If the rebate offer is 2000 dollars, you should take the rebate. If the rebate offer is 1584 dollars or lower, take the .

It’s important to realize that when figuring your monthly auto loan payment, many times other fees are included such as tax, title, tag, etc. Therefore, be sure to ask what your total monthly auto loan payment would be with everything included before you decide to purchase a new vehicle.

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