No. of Recommendations: 0

If you go to

you can calculate the difference between taking a rebate, and paying interest rate.

THe current interest rate on new car is under 4% (3.85 at bankrate).

I used 4% vs 0%, with a 3000 rebate, and 48 month term.

You save $1400 by taking the rebate.

As to wrecking the car after 1 year, you might be taking worst case. I've been driving for 40 years, never totalled a car..never had more than $1300 in a car accident, and that once from a hit/run driver. Driven 500,000 plus miles. Knock on wood.....

I'd have to look at the amortization tables, but you are basically paying the same interest rate, and the 0 percent loan is most likely front loaded (meaning you pay more than half the interest in the first year) I doubt you would be paying it off at a much faster rate. Also, the zero down might require 'life insurance' on the remaining balance, and other crap added in to protect the car company in case you totally it, and die in the process..they want to get all their money back, even if you don't have it.

I aslo fail to see where this $100/mo more comes from. The zero down loan costs more, you pay more per pay $1400 more for the privelege of thinking you got a good deal by zero percent financing. You are paying LESS per month by taking the rebate. (if you pay $1400 less over the life of the car loan, obviously you are going to pay less each month!).

In fact, at 4% vs 0%, you would be saving 29.16 per month on a 48 month loan.

Or put in perspective, if you live in California, and pay fed and Calif taxes equal to 40-45%, you have to earn more than $55 per month extra just to pay for the privelege of zero percent down financing.


At a 5% loan for 48 months, you would save $1000 over the life of the loan, or $20/mo. OR in California, you would have to earn nearly $40-45 per month, or over $500 each year to make the extra payments for 'zero down' financing.

ISn't it amazing how the math used by car dealers always seems to show that the 'best' solution is always the one that makes them the most money? Just who do you think pays for all the money the auto salesmen/finance manager get on commissions by selling you 'zero percent' financing?


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