Low APR vs. Discounts: Which Is Better?


If you’re looking to buy a new car or truck, manufacturer discounts can help lower your purchasing costs. However, promotional finance deals can also offer significant savings. The downside is that these incentives usually cannot be combined. Therefore, the offer you choose could affect your budget for years to come.

For example, GM Financial currently has a 0% APR financing offer for 72 months on the Chevrolet Trax. Your alternative is a $ 500 cash incentive. With the rebate, a six-year loan on an SUV of $ 25,000 at an interest rate of 4% would cost about $ 27,598 excluding taxes and fees. That’s almost $ 2,600 spent on interest.

By comparison, a six-year 0% loan would cost $ 25,000. Even if you would miss an initial rebate of $ 500, the total cost is less. In addition, you could suffer a lower monthly payment. With 0% APR financing, it would be around $ 347 / month. With the discount, the estimated monthly payment is $ 383.

Longer loans can sometimes be good deals, but they can have drawbacks. If you plan to sell your car within a few years, an 84-month car loan might not be a good idea. This is because having a car worth less than what you owe due to depreciation can lead to negative equity that is not always easy to get rid of.

That said, financing isn’t always the best deal. For example, Chevrolet sometimes offers price offers for employees promising more than $ 10,000 in savings on certain models. We recommend that you consider the pros and cons of discounts versus a low APR before making a decision based on a realistic expectation of the rates you qualify for.

To take the guesswork out of it, you might want to get pre-approved for a car loan from a bank or credit union. Since the best rates are limited to those with prime credit, you may end up with a higher interest rate. Buyers with subprime credit may want to find a car dealership in their area that specializes in helping customers with bad credit.

Cars with the biggest discounts

Pictured: 2022 Chevrolet Trax


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