Low Rate vs. Cash Back Auto Financing Calculator

When buying a car, you may be faced with either a cash back incentive or lower interest rate. This calculator outlines the total amount you’ll pay with either option, comparing total savings.

Enter the price, down payment, loan term, and interest rate (not the low offer rate) for the car you’re hoping to buy. You’ll also be given options to enter a trade in value. When done, you’ll see which offer saves you more money, the predicted loan amount, and how much you could save.

When buying a car, you may be faced with either a cash back incentive or lower interest rate. This calculator outlines the total amount you’ll pay with either option, comparing total savings.

Enter the price, down payment, loan term, and interest rate (not the low offer rate) for the car you’re hoping to buy. You’re also given options to enter a trade in value. When done, you'll see which offer saves you more money, the predicted loan amount, and how much you could save.

Trading in your car for cash puts money directly in your pocket, and can immediately reduce the overall cost of a new car. This can be particularly beneficial if you need to lower your out-of-pocket expenses. However, the trade-off is that you might not get the absolute highest value for your car compared to selling it privately. Additionally, the amount of cash back offered may be less than the potential savings from a lower interest rate over the loan term.

Trading in your car for a lower interest rate is generally advantageous when you plan to finance a significant portion of your new vehicle and keep it for an extended period. Over the life of the loan, even a small reduction in the interest rate can result in substantial savings. This option is ideal if you prioritize long-term financial benefits and want to minimize the total amount you pay for the car.

Our calculator allows you to input the trade-in value of your car, the cash back offer, and the potential interest rate savings. By comparing these figures, you can see the immediate impact of cash back versus the long-term savings of a lower interest rate. The calculator provides a clear financial picture, helping you determine which option aligns best with your financial goals and circumstances.

Beyond the immediate cash back and interest rate savings, consider the condition of your trade-in vehicle, the current market demand for your car’s make and model, and the terms of the loan agreement. Of course, don’t forget to factor in your personal financial situation, including your monthly budget and long-term financial plans. If you decide to get a new car after trading your old car in, aim for your car payment to be less than 15% of your after-tax income (thank you, 50/30/20 rule!)

Yes, it's possible to negotiate both the trade-in value of your car and the interest rate on your new vehicle loan. Do your research beforehand to understand the market value of your trade-in and the average interest rates offered by lenders. If you play your cards right, you may be able to walk away with cash in your pocket and a lower interest rate for a new car. Remember to always get quotes from more than one dealer or lender!

Yes, you can trade in a financed car, but the process is a bit more complex. The dealership will assess your car’s value and compare it to your remaining loan balance. If the trade-in value is higher than your loan balance—or you have a positive equity in the car—the difference can be applied towards your new vehicle. However, if your loan balance exceeds the trade-in value, also known as negative equity, you’ll need to pay the difference, which can be rolled into your new loan. It’s crucial to understand your loan balance and the car’s market value before proceeding.

Disclaimer: This calculator provides estimates for informational purposes only. Actual savings may vary. Consult with a financial advisor for personalized guidance.