Car Rebate vs. Low Interest Formula: Car Payment = PMT( Interest Rate Per Month, Number of Payments, Loan Amount). Multiply this by the number of payments for the total amount, and compare the totals between a rebate and low interest rate.

Car Rebate vs. Low Interest Definition When you are preparing to buy a new car, there’s a lot to consider beyond the sticker price. One of those considerations is whether to choose a rebate on your purchase or a low interest rate. Both will save you money. But to determine which will save you more, you must consider several factors:

The purchase price of the car in question

The value of the rebate

The interest rate that you will receive with and without the rebate

The payments you are able to make on the car

The best way to keep track of all of those different variables is with the Car Rebate vs. Low Interest Calculator. This tutorial will walk you through the steps necessary to fill in the calculator. Then just hit “Calculate!” to discover the best option for your car purchase.

The Price of the Car This is easy enough. Simply enter the price you’ve negotiated into the space on the calculator. When entering the price, make sure to include any taxes and fees that are included with the price of the car. The taxes and fees largely depend on the state you are in. The easiest way to come up with this value is with the help of your car dealer.

The Rebate Value Car rebates are cash incentives for buying a car. The rebates offered for a car often depend on the make and model of the car and the dealership you’re dealing with. Slow-moving models of cars often have the highest rebates. By shopping for the same model from dealer to dealer in your and other areas, you may be able to find larger car rebates. When considering a rebate, ignore any government rebates being offered. Currently, there are governmental rebates on hybrid cars, electric cars and alternative fuel vehicles. These rebates will reduce the price of the car, but they won’t affect the dealership’s offer. Once you settle on the best rebate deal that you can negotiate, simply enter that rebate into the appropriate space on the calculator.

The Low Interest Rate Offer Another incentive that car dealerships offer is a lower than usual interest rate. Interest rates offer savings but over a longer amount of time by reducing the amount of interest that you have to pay the bank and the dealership for the privilege of borrowing the money to buy the car. The interest rate that you are quoted will be an annual percentage rate (APR). Enter that percentage into the appropriate space as its quoted to you. For example, if you’re offered 12.5% APR, enter 12.5 into the space.

The Regular Interest Rate Offer If a car dealership is giving you a choice between a rebate or a lower APR, you will be quoted two interest rates: one with the rebate and one without it. The second, higher interest rate depends on several factors including your credit rating and the amount you intend to borrow. List the higher rebate APR in this space.

The Number of Monthly Payments You’ll Have to Make This portion requires a little bit of work on your part. First write down the purchase price of the car including taxes and fees. Then determine the amount that you will be able to pay each month. Finally, divide the monthly payments into the purchase price of the car. For example, if the car will cost you $15,000 and you can pay $400 per month, you will need to make 37.5 or 38 monthly payments. Enter that number into the calculator. Once you hit calculate, you’ll discover which choice is better for you. Check out some of our other similar calculators like the Car Loan Payment CalculatorĀ and the Car Purchase Calculator.

How to Calculate Car Rebate vs. Low Interest Let's be honest - sometimes the best car rebate vs. low interest calculator is the one that is easy to use and doesn't require us to even know what the car rebate vs. low interest formula is in the first place! But if you want to know the exact formula for calculating car rebate vs. low interest then please check out the "Formula" box above.