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Rebates or low financing?

Should I choose a rebate or a low interest rate loan?

Vehicle buyers are often stumped by this question. Which is the best option, a rebate or the manufacturer’s low financing rate?

The discount or rebate is often applied directly to the vehicle sales price before taxes, which decreases both the amount of taxes to pay, as well as the interest to pay on the total amount financed.

So how do you decide which is the better option for your wallet?

To make an informed decision, you need to calculate the total auto loan amount to pay throughout its term, for both scenarios. Will the sum of monthly payments for a reduced rate auto loan be lower than the sum of monthly payments for the auto loan for a lesser amount after rebate, but at a slightly higher interest rate? For an auto loan that is spread out over several years, the difference could be significant.

Scenario 1: cash back

This first scenario consists of the vehicle price with the value of the discount or rebate on the vehicle that the manufacturer or dealership is offering.
Calculate everything that is relevant: taxes, auto loan financing percentage, term of the auto loan, down payment, etc.

Scenario 2: low promotional rate

Create a second scenario, changing the interest rate to the promotional rate offered (for example: 0% or 1.99%), but remove the amount subtracted for the rebate since it does not apply to this scenario.

Compare the results. You might be surprised! Often, the rebate is the better option for your wallet.

To determine which option is best for you, use our auto loan calculator.
Example with a $4,000 rebate or a 0% auto loan interest rate

New, mid-size minivan Cash rebate Preferential rate
Purchase price (before taxes) $23,900 $23,990
Interest rate 3.99% 0.00%
Term (months) 72 72
Discount or rebate (before taxes) $4,000 $0
Financed amount (before taxes) $19,990 $27,583
Monthly payment $359 $383
Total payments at maturity $25,882 $27,583
Monthly savings $24 -
Savings over the life of the loan, with rebate $1,700 -

Excellent rates with Desjardins Auto and Leisure Vehicle loans 

Desjardins Auto and Leisure Vehicle loans offer excellent interest rates which, paired with a rebate, can significantly reduce the total price of your vehicle. Desjardins members enjoy a 0.30% discount on the interest rate. When you speak to your merchant or dealership, tell them that you want to finance your vehicle with a Desjardins Auto or Leisure Vehicle Loan.

Learn more about Desjardins Auto and Leisure Vehicle loans.
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