Manufacturers usually make you pick one: 0% financing, or a cash rebate with financing at market rates. See which one actually costs less for your numbers.
Quick answer: 0% APR usually wins unless the rebate is large relative to your loan amount (typically 12–15%+ of the financed amount) or the market rate you'd otherwise pay is very low. Run your own numbers below — the crossover point depends heavily on your rebate size and market APR.
Dealers and manufacturers almost never let you combine 0% APR with a cash rebate — you have to pick one. If you take the 0% offer, you finance the full amount (price minus down payment) at zero interest, so your total cost equals the vehicle price. If you take the rebate instead, the rebate reduces what you finance, but you pay whatever APR you can get from your bank, credit union, or the dealer's non-promotional rate. This calculator runs both amortization schedules side by side and shows which one leaves you paying less out the door.
The math comes down to a simple trade-off: does the interest you'd pay on the rebate route exceed the size of the rebate itself? If yes, 0% wins. If the rebate is bigger than the interest it would otherwise cost you, the rebate wins.
Example 1 — moderate rebate: $32,000 car, $4,000 down, a $2,000 rebate, and a 6.5% market APR over 60 months if you skip 0%. The 0% APR route costs $32,000 total (your monthly payment is $466.67 with zero interest). The rebate route finances $26,000 at 6.5%, for a monthly payment of about $508.72 and roughly $2,523 more in total cost. 0% APR wins by about $2,523.
Example 2 — large rebate: Same $32,000 car and $4,000 down, but this time the rebate is $5,000 instead of $2,000, at the same 6.5% market APR. The 0% route still costs $32,000 total. The rebate route now finances only $23,000, and even with 6.5% interest the total cost comes to about $31,001. The rebate wins by about $999 — because this rebate is large enough that the interest it saves you from not financing that $5,000 outweighs the interest you pay on the rest.
0% financing tends to win when the rebate is small relative to the loan amount (roughly under 12-15% of what you'd otherwise finance) and the market APR you'd pay instead is anywhere near a typical rate (5% or higher). Since 0% financing means your total cost simply equals the sticker price, it's a hard baseline to beat once any real interest rate enters the picture. If you have excellent credit and would qualify for 0% anyway, there's rarely a reason to give it up for a modest rebate.
The rebate pulls ahead when it's large (often $4,000+ on a $30,000-$35,000 vehicle) or when you already have access to a very low market rate — for example, a credit union offering 2-3% on top of the rebate. In those cases, the cash-in-hand value of the rebate outweighs the modest interest you'd pay on a smaller, cheaper loan. Shorter loan terms also favor the rebate slightly, since less total interest accrues either way, shrinking 0%'s natural advantage.
Buyers often assume "0% APR" is automatically the better deal because 0% sounds unbeatable — without ever running the actual rebate numbers. The reverse mistake also happens: taking a rebate that sounds generous without checking what APR you'd actually qualify for outside the promotion. Both offers are marketing, and the only way to know which is genuinely cheaper for your situation is to plug in your specific price, rebate, and rate and compare the total cost, not just the headline number.
It doesn't include sales tax, title, or registration fees (which apply equally to both options and don't change the comparison), dealer financing markups some lenders add on top of your approved rate, or the possibility that 0% offers are often restricted to shorter terms or specific trims than the rebate. It also assumes you'd qualify for the market APR you enter — 0% offers typically require excellent credit (720+), so if you wouldn't qualify for 0% in the first place, the rebate route may be your only real option regardless of the math.