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Even better than finding the perfect car is finding a great deal on a great car. One of the easiest ways to get an affordable new car price is to take advantage of special car deals from an automaker. The best deals are offered on cars that aren’t selling as fast as manufacturers want them to sell, are still on dealer lots at the end of the model year, or have refreshed or redesigned versions on the way.

Most car deals are either cash back rebates or special financing deals. Both types of incentives can save you significant amounts of money, but they do so in different ways. Unfortunately, most automakers don't allow you to take advantage of more than one incentive. The exceptions are incentives that are a package deal of both rebates and low-interest rate (or zero percent) auto loans.

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In this guide, we’ll look at how the different deals work, and how you can decide between competing offers on eligible vehicles.

Cash Back Offers

While it would be cool, you don’t actually get a pile of cash or a big check from the dealer when you choose a cash back deal. This type of offer is simply a discount on the selling price of a new car. Cash back offers go by several names including bonus cash, rebates, cash rebates, or cash incentives. Most of the programs are similar, despite the different names used by car manufacturers.

When you get a lower price on a car, you can get a smaller car loan, shorten the length of your financing, or be able to afford a nicer vehicle without exceeding your budget. If Cadillac, for example, is offering a large cash back deal, you might be able to step up from the Buick you were initially considering.

Let’s say you’re looking at a minivan with a $35,000 MSRP and $3,000 in rebates. You subtract the amount of the rebates from the sticker price, and the new purchase price of the car becomes $32,000. With some cash back offers, the total amount of the rebates can come from different programs, such as a rebate for an option package, a rebate for a seasonal sale, and a rebate for using the manufacturer’s internal financing company.

Even if you get a rebate (or a financing deal, for that matter), you should still negotiate to get an even lower price, discounts on fees, or extras like floor mats or lifetime oil changes.

Low-Interest or Zero Percent Financing

Special financing offers save buyers money by reducing or eliminating the interest they pay on their auto loans. The offers come from the financing arms of automakers and give buyers interest rates that are lower than they would get at banks or credit unions.

Though any financing deal with rates below the market average can save you money, the best financing incentives are zero percent financing offers. They don’t just reduce the amount of interest you have to pay, they eliminate interest altogether. You only have to pay back the exact amount you borrow.

Let’s look at an example. We’ll say you found a new sports coupe with a sticker price of $30,000. If you have to pay the current market average of 4.77 percent on a five-year loan, an auto loan calculator will tell us that your monthly payment is $563. Over the term of the loan, you’ll pay a total of $33,780. Of that amount, $3,780 is interest.

If you are able to get a financing deal with a 1.99 percent interest rate on the same car, your monthly payments drop to $526 per month. By the time you pay off the loan, you will have paid $31,560 in interest and principal. The total interest on the 1.99 annual percentage rate (APR) loan is $1,560, or less than half of the market-rate amount.

Get lucky and find a zero percent financing offer, and you’ll pay no interest on the auto loan. Compared to market-rate financing, you will have saved $3,780.

There are a few ways you can use the savings with a low APR or zero percent loan. You can shorten the loan term, balancing a monthly payment you can afford with the shortest loan that gives you that payment. You may be able to get a slightly more expensive car, either by moving to a different model or adding options to the vehicle you were already considering. If the loan interest rate is zero percent, you can take the longest term available, and pay a little extra when you can to pay off the loan early, while still enjoying low payments in the months where your budget is a little tighter.

Determining the Total Cost of a Car

The only accurate way to compare car deal options is to look at the total cost of buying a vehicle – including the cost of financing. We showed you some total costs in the example above, and now we’ll break down the steps we used to determine those totals.

Zero Percent Offers

The easiest incentive to figure the total cost of is a zero percent financing deal. The total cost of the new car is the price you negotiate for the purchase. Since there are no interest charges, there’s nothing to add to the purchase price, other than taxes, registration, and other fees added by the dealer.

Low or Market Interest Rates

To find the total cost of a car with a low APR financing deal or a market interest rate, you’ll need to use a car loan calculator to figure the compound interest and show you a monthly payment. You plug the amount of money you need to borrow, the interest rate, and the length of the loan you're seeking, and the calculator will determine the monthly payment. Some auto loan calculators can also incorporate sales tax, but for quick comparisons of different offers, it's easier just to include the basics of the loan.

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For this example, we’ll say you are purchasing a $40,000 SUV from a dealer and assume you’re seeking a five-year loan and have found a 1.99 percent financing deal. We’ll say you’re paying $4,000 down, and you have a trade-in that is worth $5,000. You’ll need to finance $40,000 minus the down payment and trade-in, or $31,000. Enter the $31,000 loan amount, 1.99 percent interest rate, and five-year loan term into the calculator, and it will generate a monthly payment of $543 per month.

While it is important the $543 payment fits into your monthly budget, you need to take another step to see the total cost of the car. Multiply the $543 you’ll pay monthly by the number of months in the loan (60 in this case), then add the amount of your down payment and trade-in. When you do so, you’ll see the total cost of the SUV with this low-interest deal is $543 times 60, plus $4,000, plus $5,000. The total cost of the vehicle works out to $41,580 in this example.

Cash Rebates

To determine the total cost of a car with a cash rebate, you subtract the rebate amount, any down payment, and the value of your trade-in from the price of the vehicle before you calculate the loan payment.

We’ll use our $40,000 SUV for an example. We’ll say there’s a $3,000 rebate and you’re still making a $4,000 down payment, plus you have a $5,000 trade-in. The amount you need to finance is $40,000, minus the $3,000 cash back, the $4,000 down payment, and the $5,000 trade-in. Because you are taking the cash back, you likely won’t qualify for low APR or zero percent financing, and you’ll have to pay market rates. So we’ll plug the $28,000 you need to finance (after subtracting the amounts above) into the car loan calculator with a five-year loan term and the current average market interest rate of 4.77 percent. The calculator computes the monthly payment to be $525.

Next, multiply the $525 car payment by the 60 months in the term of the loan, then add the value of your trade-in and the amount of your down payment. The total cost of the SUV with the cash back deal is $40,500.

Of course, you probably won’t pay exactly the market average interest rate. If you do your research and check with local banks, credit unions, and lenders, you may be able to find an interest rate that is below the market rate. U.S. News partner myAutoloan can provide up to four loan offers with just one simple online application.

Comparing Offers

Using the calculations above makes it easy to compare different types of offers. For example, if an automaker offered you either the 1.99 percent financing deal in our example or the $3,000 rebate, you can see the bonus cash was the better deal. With the 1.99 percent APR deal your payments would be $543 per month and the total vehicle cost is $41,580. Opt for the bonus cash deal, and your payments are $525 monthly or $40,500 over the life of the loan. That's a savings of more than $1,000 over the five years you're making car payments, compared to the low-interest rate incentive.

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If, on the other hand, the choice is between a zero percent offer and the cash back deal in the example above, a zero percent deal would cost $40,000, compared to the $40,500 you would pay with the $3,000 rebate deal.

It is essential to run the numbers for specific deals you are considering. Every transaction is different, and it’s difficult to say that one type of deal is always better than another. If you are at the dealer, take out your calculator and perform the calculations yourself. Salespeople have a tendency to include a multitude of confusing information into their calculations in an effort to keep your focus on the monthly payment. Purchasing a car based solely on the payment is a potentially costly car-buying error.

myAutoloan

APR Range: 1.99% - 27%

Loan Term: 24 - 84 months

Loan Range: $8,000 - $100,000

Applicant Requirements:

At least 18 years old, resident of the U.S. (except Alaska and Hawaii), with min. income of $1,800/month and min. credit score of 500

Vehicle Requirements:

Max mileage of 125,000 miles, 10 years old or newer

myAutoloan presents up to four offers from a variety of participating lenders based on your specific loan requirements, offering a wide variety of choice and selections.

LightStream

APR Range: 3.34% - 17.49% (AutoPay Discount of 0.50% also included)

Loan Term: 24 - 144 months

Loan Range: $5,000 - $100,000

Applicant Requirements:

Must have good to excellent credit*

Vehicle Requirements:

No restrictions

LightStream caters heavily to applicants with very strong credit scores, offering a streamlined application process and a Rate Beat program that guarantees they'll beat any other qualifying offers an applicant receives.

Capital One

APR Range: 3.99% - 10.08%

Loan Term: 36 - 72 months

Loan Range: $4,000+

Applicant Requirements:

$1,800/month minimum income requirements, resident of the U.S. (except Alaska or Hawaii)

Vehicle Requirements:

Limited to vehicles available through the Capital One network of dealers

Capital One offers a pre-qualification, which allows you to take your offer to any participating dealer within 30 days.

Chase

APR Range: 4.29% - 24.99%

Loan Term: 48 - 72 months

Loan Range: $4,000+

Applicant Requirements:

At least 18 years old

Vehicle Requirements:

Limited to vehicles available through the Chase network of dealers, no older than 2008

After your application is approved, Chase will send the information to the dealer you choose. The offer is good for 30 days.

Bank of America

APR Range: 3.49+%

Loan Term: 12 - 75 months

Loan Range: $7,500 - $100,000

Applicant Requirements:

At least 18 years old (19 in Alabama or Nebraska) U.S. resident

Vehicle Requirements:

Max mileage of 125,000 miles, 10 years old or newer, valued at $6,000+, plus additional restrictions

Bank of America Preferred Rewards clients can receive an interest rate discount of 0.25-0.50% depending on their tier at the time of applying for an auto loan.

Company

Details

Requirements

Descriptions

myAutoloan

APR Range: 1.99% - 27%

Loan Term: 24 - 84 months

Loan Range: $8,000 - $100,000

Applicant Requirements:

At least 18 years old, resident of the U.S. (except Alaska and Hawaii), with min. income of $1,800/month and min. credit score of 500

Vehicle Requirements:

Max mileage of 125,000 miles, 10 years old or newer

myAutoloan presents up to four offers from a variety of participating lenders based on your specific loan requirements, offering a wide variety of choice and selections.

LightStream

APR Range: 3.34% - 17.49% (AutoPay Discount of 0.50% also included)

Loan Term: 24 - 144 months

Loan Range: $5,000 - $100,000

Applicant Requirements:

Must have good to excellent credit*

Vehicle Requirements:

No restrictions

LightStream caters heavily to applicants with very strong credit scores, offering a streamlined application process and a Rate Beat program that guarantees they'll beat any other qualifying offers an applicant receives.

Capital One

APR Range: 3.99% - 10.08%

Loan Term: 36 - 72 months

Loan Range: $4,000+

Applicant Requirements:

$1,800/month minimum income requirements, resident of the U.S. (except Alaska or Hawaii)

Vehicle Requirements:

Limited to vehicles available through the Capital One network of dealers

Capital One offers a pre-qualification, which allows you to take your offer to any participating dealer within 30 days.

Chase

APR Range: 4.29% - 24.99%

Loan Term: 48 - 72 months

Loan Range: $4,000+

Applicant Requirements:

At least 18 years old

Vehicle Requirements:

Limited to vehicles available through the Chase network of dealers, no older than 2008

After your application is approved, Chase will send the information to the dealer you choose. The offer is good for 30 days.

Bank of America

APR Range: 3.49+%

Loan Term: 12 - 75 months

Loan Range: $7,500 - $100,000

Applicant Requirements:

At least 18 years old (19 in Alabama or Nebraska) U.S. resident

Vehicle Requirements:

Max mileage of 125,000 miles, 10 years old or newer, valued at $6,000+, plus additional restrictions

Bank of America Preferred Rewards clients can receive an interest rate discount of 0.25-0.50% depending on their tier at the time of applying for an auto loan.

Disclaimer: All information provided here is based on Annual Percentage Rate estimates from the websites of the individual lenders on 12/18/2018. It is not a binding or guaranteed loan offer. Individual auto loan rates will vary.

Notes: In compiling this data, we used new-car purchase rates for Virginia.

*To meet LightStream's standard for good credit, you must have several years of credit history with a variety of account types, including credit cards, installment debt (vehicle loans), and mortgages. LightStream also prefers to see few, if any, delinquencies and a history of savings, evidenced by things like deposit accounts and manageable revolving credit card debt. You'll also want to provide proof of stable and sufficient income to repay current debt obligations as well as any new loan with LightStream.

When Cash Back Makes Sense

There are a few situations where taking a manufacturer rebate makes a lot more sense than taking a low APR or zero percent offer. If you have a high-value trade-in and will not need to borrow too much money to buy your vehicle, taking the cash is usually the better option. Similarly, if you are planning to pay cash or making a substantial down payment, which dramatically reduces the size of the auto loan you need, opting for a rebate over a financing offer is likely a better deal for you.

It’s not always a good idea to pay up front. Our article on paying cash for a car can help you decide whether it’s a good decision for you.

To get a special financing deal from an automaker, your credit must be top-notch. If you don’t qualify for their financing offer, taking the cash back deal may be your only option.

Refinancing to Get a Better Rate

Sometimes, automakers require you to use their financing to qualify for a cash back offer. When you do so, you'll have to accept whatever interest rate they are offering. Fortunately, there's a way to get around that requirement. You accept their financing but refinance the loan at a bank or credit union as soon as your original loan agreement allows you to. In many cases, you’ll have to wait a few months to refinance without losing the amount you accepted as a rebate.

You can read more about how financing works in our guide to getting an auto loan.

Our partner myAutoloan makes refinancing a loan easy by using just one application to get you offers from several lenders.

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View rates for new cars, used cars, or refinancing. Get four offers so you're prepared before you visit the dealer.

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The Importance of a Good Credit Score

Manufacturers typically offer their best deals only to buyers with excellent credit scores. In order to qualify for the best auto loan rates, you’ll need to have a credit score in the prime or super prime categories. A high credit score demonstrates to lenders you are able to keep up-to-date on your car payments and have a track record of financial discipline.

What is a Credit Score?

One of the most critical factors lenders consider when deciding whether to offer you a car loan is your credit score. It’s a three-digit number between 300 and 850 that represents the information found in your credit reports from reporting agencies Experian, Equifax, and TransUnion. It’s a snapshot of your creditworthiness.

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Your credit score is a window into how good you are at making on-time payments on all of your obligations, including credit card debt, student loans, mortgages, and other car loans. It considers the limits on your credit cards and how much of that available debt you are using. If you have defaulted on a loan or credit card in the past or declared bankruptcy, it will significantly drop your credit score.

How Can I Make Sure My Credit Score is High Enough?

The best way to ensure that your credit score is good enough to help you qualify for low-interest financing is to check your scores well in advance of buying a car. If it is low, look at the credit reports behind the score to see what’s causing the issue. You’ll then want to take some time to correct any errors and work to strengthen areas where you’ve had challenges. Making on-time payments has the greatest impact on the score, followed by paying down balances that are approaching credit limits.

Where Can You Find a Low-Interest Loan or Cash Back Deal?

While you can visit each manufacturer’s website to survey the market and find the best offers, there’s a much easier way. The expert journalists and researchers of U.S. News & World Report search the automotive market to find the best cash back and financing deals available. Our new car deals page shows hundreds of the best incentives available.

More Shopping Tools From U.S. News & World Report

Even the most fabulous deal isn't much of a bargain if you’re not getting a good car. Our new car rankings and reviews are based on the consensus opinion of the country’s top journalists, melded with quantitative information about safety and predicted reliability. We look at the factors buyers tell us are critical to their purchase decisions to show which vehicles are exceptional, and which shouldn’t be on your shopping list.

We endeavor to arm consumers with actionable information to guide them through the car-buying process. Starting with our guide to buying a car, we’ll help you explore topics such as leasing versus buying, choosing new cars versus used vehicles, and how to avoid costly add-ons.

When you are ready to buy, visit our new car deals and lease deals pages to find the best incentive manufacturers are currently offering. The U.S. News Best Price Program can save you even more by connecting you with dealers offering pre-negotiated prices. Whether you’re planning to use a special car deal or not, it’s a good idea to have a financing plan in place before you head to the dealer. Our partners at myAutoloan can set you up with a pre-approved car loan quickly and easily.