|
|
|
|
Auto Rebate vs. Low Interest Financing
|
Use this calculator to help you determine whether you should take advantage of low
interest financing or a manufacturer rebate. A rebate will reduce your auto loan
balance, while low interest financing lowers your monthly payment. The best option
depends on the price of the vehicle, the size of the rebate and the interest rates
available for financing.
|
Definitions
|
|
Total purchase price (before tax)This is the total cost of your auto
purchase. Include the cost of the vehicle, any additional options and any destination
charges. Don't include sales tax in this amount. Sales tax will be calculated for
you and included in your total after tax price.
Term in monthsNumber of months for your auto loan.
Cash downTotal amount of cash used in this purchase. The larger your
cash down payment the smaller the loan you will need to finance this purchase.
Trade allowanceThe total amount that you are given for any automobile
that you trade-in as part of this purchase. In some states a trade-in can also reduce
the amount of sales tax you will owe. See the definition for "Sales tax deduction
for trade-in" for more information on trade-in vehicles and sales tax.
Amount owed on tradeTotal loan balance still outstanding on the trade-in.
Sales tax rateSales tax percentage rate charged on this purchase.
Low interest financingThe incentive interest rate you may be able to
receive from an auto manufacturer. These rates are usually significantly below standard
auto loan interest rates. Low interest financing can be as little as 0% per year.
Most manufacturers allow you to choose either low interest financing or a manufacturer
rebate, but not both. This calculator assumes that if you choose low interest financing
you are not eligible for any manufacturer rebate.
Manufacturer rebateA cash rebate paid by the auto manufacturer to you
when you purchase a new vehicle. Most manufacturers allow you to choose either low
interest financing or a manufacturer rebate, but not both.
Traditional financingThe interest rate you may be able to receive from
a bank, credit union or other lender. This is usually a higher interest rate than
the manufacturer's low interest financing, but is often very competitive when used
in combination with a manufacturer rebate. This calculator assumes that if you choose
a manufacturer rebate you are not eligible for manufacturer low interest financing.
No sales tax deduction for trade-inIf you live in a state where your
sales tax is calculated on your full purchase price check this box. If this box
is unchecked sales tax is calculated on the purchase price less trade-in. Currently
California, the District of Columbia, Hawaii, Maryland and Michigan allow no deductions
for trade-ins when calculating sales tax. In addition, Alaska, Delaware, Montana,
New Hampshire, and Oregon have no sales tax on autos.
Calculate sales tax before rebate
Some states will calculate sales tax on your purchase price before a manufacturer's
rebate is applied. If your state calculates sales tax on the vehicle price before
the rebate is applied, check this box.
|
Information and interactive calculators are made available
to you as self-help tools for your independent use and are not intended to provide
investment advice. We can not and do not guarantee their applicability or accuracy
in regards to your individual circumstances. All examples are hypothetical and are
for illustrative purposes. We encourage you to seek personalized advice from qualified
professionals regarding all personal finance issues.
|
|
|