Many times are advertisements will offer either a large cash rebate or a low annual percentage rate (APR), but which one gives more value? Most of the time the rebate is going to give you the best deal if you use it as a down payment.

Many customers will not qualify for the advertised zero percent APR or similar low rates. Only consumers with impeccable credit ratings receive these kinds of values. In addition, your credit score may translate differently from dealer to dealer. You may qualify at one store and not at the other. The advantage to the rebate is that everyone is eligible.

When dealers offer incredibly low APR�s it�s generally because the term of the loan is much smaller, usually less than five years. While the APR is good, some loans have monthly payments that will balloon meaning your monthly payment could inflate dramatically. Some dealers could even require a higher down payment in order to qualify for the low APR.

A low APR offering can also mean that year-end models just aren�t moving, and therefore could only apply to dealer stock items. If you want to be picky about model or color than this could leave you left out. This often applies to rebates as well. Low APR�s and rebates are another tool for the dealer to move older cars in anticipation of the newer models.

In the long run doing your homework and shopping around will be rewarding. Many times you will be able to save money by taking the rebate over the low APR. Combining your rebate with a low rate from your local bank could save you more than if you finance through the dealer. Lets say for example you wish to purchase a $20,000 car and have a $3,000 down payment. The dealer tells you he can give you a $3,000 rebate or a special 5% APR. You consult your local bank, where they offer you a loan at 7% APR. On a four-year loan, utilizing the rebate and local bank financing instead of the dealer financing will save you $2,568, or about $53 a month.