Better to take the rebate or the 0%

[chicaloca]

Forgive me for asking this question if it has been addressed before. My Mom asked me the question and I couldn't remember which worked out better in the long run. She is looking at a Honda CR-V. Her credit is beyond excellent.

Thanks in advance!!!

Chica loca

[hoapres]

Your going to have to run the numbers. Is the rebate in lieu of 0% financing and how long does your mother plan on keeping the car ??

 

My own personal preference is to "take the money and run" - get the lowest possible price and then haggle over financing. If your mother's credit is beyond excellent then interest rates for regular financing should be low.

[54regcab]

Think of the "0%" as "pre-paying" the interest equal to what you are giving up on the rebate.

If you are buying a $25K car and are offered "0%" or a $4,000 rebate you are really buying a $21K car and "prepaying" $4k in interest. The $4,000 "finance charge" is built into the price of the car. By the way if you trade or pay the loan off early there is no "refund" of the "prepaid interest". You start out an extra $4,000 upside down on the car since you "financed" the "prepaid interest" even if it's at 0%.

I say take the rebate and run in most cases, but run the numbers for yourself.

Edited July 28, 2005 by 54regcab

[MarvBear]

gut feeling is take the $ amount of the cash incentive.

 

Seek other financing.

 

Should come out better in the long run.