Auto Finance Guide: Evaluating Loan Options & rebates

When you look at financing that new car, your usual choices are going to be: Go with something the dealer offers you, or get financing on your own from a bank, credit union or other lender.

Deciding which way to go can be confusing because manufacturers and dealers offer a wide array of promotional finance deals. One car company a few years ago even offered a loan with no payments for the first year. Sounds good, huh? Until you looked at the fine print and discovered that it was a five-year loan and the payments for the last four years were jacked up to cover what you didn't pay that first year.

So consider any special deals as just a starting point, especially when there's a choice of cut-rate financing or a cash manufacturer's rebate.

Rate is only one factor

A really low interest rate, undeniably, is attractive. But always keep in mind that the interest rate is only one of many factors and numbers that go into the overall cost of your new vehicle, albeit a major one. And it can be calculated in different ways: The APR (annual percentage rate) is the best rate to use for comparisons.

Getting a "low, low'' interest rate might not save you money in the long run if the numbers are inflated elsewhere in the deal. The same is true of a rebate.
So what's a better deal: Snapping up an ultra-low financing rate or pocketing a $1,000 rebate? It depends.