Auto Loans: 0% APR versus Instant Cash Back

When a car dealership or manufacturer is looking to move cars, it often turns to perks like the 0% APR or instant cash back deals to lure in the customers – and it works. But the question is, which is the best for you?

0% APR

As you have probably guessed, 0% APR simply means that you don’t have to pay interest on your car. This type of deal can result in you saving up to $50 per month on your monthly payment – pretty impressive! And because interest rates have risen to as high as 7.76%, it’s a deal that many people can’t help but take advantage of.  


Instant Cash Back

Instant cash back is the manufacturer offering you an immediate lump sum of money once you’ve agreed to loan terms. Some prefer to take this route if they don’t think they will keep the car long enough to accumulate any real savings through the lowered interest rate.

What You Should Consider

Now that both 0% APR and instant cash back have you interested, keep these ideas in mind:

You many not qualify. Unfortunately, not everyone qualifies for these types of deals. You typically need to have a FICO score in the 680 and over range to take advantage of the no interest rate deal. And while the rebate deal is more lenient, you still may need decent credit and good income to qualify.

You have the right to negotiate. Just because you’re getting a deal doesn’t mean they can’t lower the car price further. In the case of a rebate, you can try to negotiate a greater deal. And with both deals you can simply learn the invoice price of the car (the amount that the dealer is paying the manufacturer) and negotiate up.

Whether you’re thinking about going with 0% APR or instant cash back, no matter which deal you choose, you will be benefiting from a significant reduction in the price of the vehicle. It’s a win-win situation.