Manufacturers almost never let you have both. Pick 0% financing and you give up the rebate. Take the rebate and you finance at whatever rate your bank, credit union, or the dealer's non-promotional program offers. Both offers are marketed as the "deal" — but only one of them actually costs less, and it depends entirely on your specific numbers.
Quick answer: 0% APR wins in most typical cases, because your total cost simply equals the sticker price with zero interest added. The rebate only wins when it's large relative to your loan amount (roughly 12–15%+ of what you'd otherwise finance) or when the market rate you'd pay instead is very low.
When you take 0% APR, you pay no interest at all — your total cost over the life of the loan is exactly the amount you finance, no more. That's a hard number to beat once any real interest rate enters the picture. The rebate route, by contrast, always adds some interest back in, because you're financing at a market rate instead of a promotional one. The question isn't whether the rebate route adds interest — it always does — it's whether the rebate itself is bigger than that added interest.
Take the rebate only if: rebate amount > total interest you'd pay on the rebate-reduced loan at your market APR. If the rebate is smaller than that interest, 0% wins. If it's larger, the rebate wins. The tricky part is that "total interest" depends on your loan amount, term, and market rate — which is exactly why a flat "always take 0%" or "always take the rebate" rule of thumb is wrong for a meaningful share of buyers.
Example 1 — moderate rebate, 0% wins: $32,000 car, $4,000 down, a $2,000 manufacturer rebate, and a 6.5% market APR over 60 months if you skip 0%. Taking 0% APR means financing $28,000 at zero interest — your total cost is exactly $32,000, with a $466.67 monthly payment. Taking the rebate means financing $26,000 at 6.5%, which comes to about $508.72/month and roughly $2,730 in interest — pushing your total cost to about $34,523. 0% APR wins by about $2,523.
Example 2 — large rebate, rebate wins: Same $32,000 car and $4,000 down, but this time the manufacturer offers a $5,000 rebate instead of $2,000, at the same 6.5% market rate. The 0% route still costs $32,000 total, unchanged. The rebate route now finances only $23,000, and even after roughly $4,001 in interest at 6.5% over 60 months, the total cost comes to about $31,001. The rebate wins by about $999 — the larger rebate more than offsets the interest on the smaller loan.
| Scenario | Rebate | Market APR | 0% APR Total | Rebate Route Total | Winner |
|---|---|---|---|---|---|
| Example 1 | $2,000 | 6.5% | $32,000 | ~$34,523 | 0% APR |
| Example 2 | $5,000 | 6.5% | $32,000 | ~$31,001 | Rebate |
Based on a $32,000 vehicle with $4,000 down over a 60-month term. Verified with the standard loan amortization formula — run your own numbers with the 0% APR vs Rebate Calculator.
If the rebate on offer is small — a few hundred to around $1,500-2,000 on a typical $30,000-$35,000 vehicle — 0% financing is very likely to win unless the market rate you'd otherwise pay is unusually low. This covers most manufacturer promotions, since automakers typically size rebates to be roughly competitive with, not dramatically better than, the promotional financing on the same vehicle.
Large rebates — $4,000 and up on a mainstream new vehicle, which shows up periodically on slower-selling models or end-of-model-year clearance — start to shift the math toward the rebate, especially if you also qualify for a strong outside rate from a credit union. The other case worth checking: if you don't actually qualify for the 0% offer in the first place. Promotional 0% APR financing typically requires excellent credit (roughly 720+ FICO), a shorter loan term (36-60 months rather than 72-84), and sometimes a specific trim or model year. If any of those disqualify you, the comparison is moot — the rebate is your real option.
A shorter loan term shrinks 0%'s advantage. Since less total interest accrues on any loan over 36 months than over 72 months, a smaller rebate can beat 0% APR on a short-term loan when it wouldn't beat it on a longer one — run both term lengths through the calculator before deciding.
The market APR you enter isn't fixed — it's whatever you can get. Getting pre-approved at your own bank or credit union before you visit the dealership often beats the dealer's "non-promotional" rate by several points, which can flip a rebate that looked mediocre into the clearly better choice. Compare your real pre-approved rate against both offers, not just the dealer's default financing.
Plug in your vehicle price, rebate, and rate to see exactly which offer costs less for you.
0% APR vs Rebate Calculator →