When a Rebate is Better than a Four-Year Dealer Loan

Oftentimes, auto dealers will offer either very low rates or cash-back rebates on car loans. Here's how to use the table below to find out when to take the rebate. As an example, let's suppose we are buying a car for $16,100. The dealer financing is 6%, and Tucoemas is offering 7%. First, find the intersection of the dealer and credit union rates in the table below. In this example, that number is 19 (we've highlighted it to make it easy to find). Next, multiply that number by the cost of the car divided by one thousand (16,100 ÷ 1000 = 16.1). Here's the math:

intersection of dealer and credit union rates: 19
times the cost of the car divided by 1000: x 16.1
result in dollars: = $306

If the rebate the dealer is offering is greater than or equal to our result, then the credit union loan is the best deal.

  Dealer Rate
2% 3% 4% 5% 6% 7% 8%
Credit
Union
Rate		 5.0% $58 $39 $20 * * * *
5.5% $67 $48 $29 $10 * * *
6.0% $76 $58 $39 $19 * * *
6.5% $85 $67 $48 $29 $10 * *
7.0% $94 $76 $57 $38 $19 * *
7.5% $103 $85 $66 $48 $29 $10 *
8.0% $111 $94 $75 $57 $38 $19 *
8.5% $120 $103 $84 $66 $47 $28 $10
9.0% $128 $111 $93 $75 $59 $38 $19
9.5% $136 $119 $101 $83 $65 $47 $28
10.0% $145 $127 $110 $92 $74 $56 $37
*Tucoemas loan is a better deal regardless of dealer discount