If you’re in the market for a new car, dealers might present you with the choice between two very attractive offers: a rebate or a low interest rate — often as low as 0%. While both offers can save you money in the short- and long-term, it’s about finding the one that’s right for you.

Ask yourself these 3 questions to help you make the right choice.

1. Do I have enough money for a down payment?

Keep in mind that rebates are not really discounts; they’re applied as down payments for the vehicle. Depending on the price of the car, rebates can range from hundreds to thousands of dollars.

If you don’t have enough cash or a trade-in for a down payment, a rebate may help you get the car you want. If you do have enough cash for a down payment or a sufficient trade-in, you might request a check to be sent to you for the rebate.

2. Do I need to lower my monthly payments?

Do the math to determine whether 0% financing or a rebate toward your down payment could further lower your monthly payments. Factor in:

  • The price of the vehicle
  • The down payment (and rebate if applicable)
  • Any trade-in being applied
  • The loan term
  • The interest rate

Depending on the price of the vehicle, applying a larger down payment could reduce your monthly payment. On the other hand, 0% financing might lower your monthly payment even more.

Can I qualify for the financing offer?

While 0% financing is a great offer, not everyone can qualify. There are two main criteria for qualifying:

  • A good credit score and credit history
  • A sufficient down payment or trade-in

When purchasing a new car and deciding between a rebate or 0% financing, research other dealer incentives in your area. Sites like Edmunds.com, Cars.com, and CarsDirect.com can help. Doing your homework can help ensure you make the best possible decision.

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