Cashback or Low Interest?
Compare two financing offers: cashback with a normal interest rate vs a low interest rate with no bonus.
Tip: For short terms (1–3 years), cashback usually wins. For long terms (5+ years), low interest often comes out better.
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About this digital tool
This comparison helps you decide between two common financing offers: option A is cashback, that is a price discount with a standard interest rate, and option B is a low interest rate with no cashback. Enter the price, the term and the rates of both offers, and the tool compares the monthly payment, total interest and net cost of each option, showing which comes out cheaper.
The result depends on the amount, the term and the difference between the rates. In general short terms favour cashback, while long terms and a big rate difference favour low interest. It is mainly used for cars and expensive appliances. The result is an estimate; check the contract terms and fees.
How to use
- Enter the full price of the item
- Enter the cashback amount offered
- Enter the standard interest rate
- Enter the low promotional rate
- Enter the financing term
- See the comparison: the total cost of each option
Frequently asked questions
What is cashback in financing?
Cashback is a sum of money the seller or lender gives you immediately as a discount when you choose financing at a standard interest rate, instead of the lower promotional rate.
How do I decide which option to choose?
Compare total cost: price - cashback + total interest (option A) vs price + total interest at the low rate (option B). The option with the lower total cost is better.
Does it apply to non-car loans too?
Yes, the same principle applies to any situation where you choose between an immediate discount and a lower interest rate — household appliances, electronics, furniture on finance, etc.
Cashback or low interest: which should I choose?
Compare the total net cost of both. For short terms cashback usually wins, for long terms and large amounts a low rate often comes out better. Use the calculator for your own case.
Does the down payment affect the decision?
Yes, a down payment reduces the financed amount and so lessens the effect of the rate. Enter your real down payment in the comparison.