auto

Is taking the 'cash back' a better deal?

Tara Baukus Melloq_v2.gifDear Driving for Dollars,
With automakers offering super-low interest rates, it seems like taking the "cash back," or the thousands of dollars in manufacturer's and dealer rebates, is never a better deal. How do I know when it's better to take the cash discount and get my own financing instead of using the manufacturer's financing arm or lending partners?
-- Cash Hungry

a_v2.gifDear Cash Hungry,
You are right to point out that most manufacturers' cash rebates and financing incentives usually can't be combined, so you'll need to decide between the two. Many consumers won't qualify for the lowest interest rate that the manufacturer is offering unless they have great credit. Most also forget they don't need to use the lender (or lenders) that are offered through the dealer. It's perfectly acceptable to use any lender you choose, and quite often, credit unions have some of the best auto loan rates available.

Often, combining the manufacturer's rebate with a higher interest-rate loan means a lower monthly payment as well as a lower cost overall. You can do some easy calculations for getting the cash back versus a lower interest rate by using Bankrate's "Car loan comparison calculator" to see what makes the most financial sense. Use this tool and do the calculation with several interest rates if you are unsure for what rate you'll qualify.

If you have a car question, e-mail it to us at Driving for Dollars.

News alert Create a news alert for "cash for clunkers"

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
 

A little research could save you BIG on interest.

Don't have time? Our rate-tracker tool saves you time and money. Delivered Thursdays.
 
advertisement
Partner Center
advertisement

Blog

Tara Baukus Mello

Flat-rate car towing as needed

Goodyear has introduced a roadside assistance program where you pay a flat rate whenever you need a tow with no annual fee.  ... Read more


Connect with us