Rebates are attractive, but are the BEST deal?
Apr 14 '00
Currently, many automobile dealers are offering both low interest rates and rebates to attract you into their showroom. Depending on your current financial position and the amount that you are financing you need to take a step back before you sign the rebate over to your trusted dealer.
For the purpose of this review, I am going to assume the following:
1. The interest rate on new car is eight percent (8%)
2. The amount financed is twenty thousand dollars ($20,000)
3. You can not wait to drive it home and show off your new car, and payment book
Example A: $20,000 financed for five (5) years at a rate of 8%
Your payment would be $405.53 a month or a total cost of financing equal to $ 24,332
Example B: $20,000 financed for four (4) years at a rate of 3.9% ***Dealer Incentive Rate***
Your payment would be $450.69 a month or a total cost of financing equal to $ 21,633
In Example B you would save a total of $2,700 in overall financing, and your monthly payment would be $45 higher per month, but twelve less payments.
Example A: $20,000 financed for five (5) years at a rate of 8%
Your payment would be $405.53 a month or a total cost of financing equal to $ 24,332
Example C: $20,000 LESS $1,500 REBATE or $18,500 financed for five (5) years at a rate of 8%
Your payment would be $375.11 a month or a total cost of financing equal to $ 22,507
In Example C you would save a total of $1,825 in overall financing, and your monthly payment would be $30 lower per month, but twelve more payments.
Final results: taking the lower interest rate (3.9%) versus the rebate saved you a total of $875 over the course of the loan. You have paid off the car in less time, but you payment would be $75 higher per month.
I began this review stating that “depending on your current financial situation and the amount you finance”, that this will influence the decision. Can you afford an additional $75 per month, yes or no?
When you are looking at a new car, I am positive that you are very confident in the color of the exterior, the type of interior, and if the car comes with floor mats or not. Be just as critical when it comes to actually paying for this vehicle. Do the math, and see which option works best for you.
Enjoy your new car,at least until the payment book arrives in the mail.
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Member: Sal
Location: CHICAGO, Illinois (Northwest Burbs)
Reviews written: 95
Trusted by: 232 members
About Me:
Chicago native, married with three daughters,Siberian Husky & a stang in the garage.
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