Cash Back or 0%

Most car dealers offer some type of cash back incentive for paying cash or they offer a 0% loan. Better run the numbers!

Many people fall into the 0% interest rate trap every year. At today's low interest rates for people with good credit it will almost always save you money to go with the cash back offer instead of 0% financing. Arrange for financing through your bank or credit union before car shopping and have that bank pay for the auto in full so you get the cash back. If you pay 4-6% it will almost always pencil for savings if you take the cash back.

If you would like to work this out to see which you should choose follow these steps :
1. Find out the amount of cash back offered.
2. Figure out the interest paid over the life of a loan.
3. Subtract the interest from the cash back and that's your savings.

There are a lot of places to look for the best rate for a car loan. Start on the internet and apply to a few programs and let the lenders compete for your business. These lenders have less overhead than a conventional bank and can typically offer lower rates to it's customers.

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