0% Financing or Cash Back Calculator

Written byOleh Soloninupdated 25 September 2026

Currency

What you know about the price

Price with 0% financing

Cash price (after cash back or discount)

0% plan term, months

Loan interest rate, %

Down payment

The loan has a different term

Advanced options

Fees and insurance on the 0% plan, in total

Any fee or required insurance for the plan; it is split evenly across the payments.

Result

0% plan payment

$833.33

Loan payment

$842.85

0% plan in total

$30,000.00

Loan in total

$30,342.51

Interest on the loan

$2,842.51

Difference

$342.51

Which is cheaper

the 0% plan costs less

Hidden rate of the 0% plan

5.74% a year

Price difference

2,500.00: 9.09% on top of the cash price, or 8.33% off the financed price

Working

0% plan: (30,000.00 − 0.00) ÷ 36 = 833.33 a month, 30,000.00 in total Loan: 27,500.00 at 6.5% for 36 months = 842.85 a month, interest 2,842.51, 30,342.51 in total Hidden rate: 36 payments of 833.33 instead of 27,500.00 up front works out at 5.74% a year

The loan at other rates

   Rate       Payment          Total    Cheaper
     5%        824.20      29,671.19    loan by 328.81
>  6.5%        842.85      30,342.51    0% plan by 342.51
    10%        887.35      31,944.52    0% plan by 1,944.52
    15%        953.30      34,318.68    0% plan by 4,318.68
    20%      1,022.00      36,791.95    0% plan by 6,791.95
    25%      1,093.40      39,362.23    0% plan by 9,362.23
    30%      1,167.42      42,027.06    0% plan by 12,027.06
    40%      1,323.03      47,629.05    0% plan by 17,629.05

This result is informational only and is not professional advice.

What a 0% offer really costs, and when the rebate and a loan are cheaper

Compare 0% financing with taking the cash price and a loan: the hidden interest rate of a 0% offer, payments and interest on each side, a cash discount or markup as a percentage, different loan terms and a table by rate.

A 0% offer costs nothing only if paying cash would not get you a lower price and the plan carries no fees or required insurance. When there is cash back or a discount for paying now, the price difference is what the 0% plan really costs, and it can be expressed as an annual rate. This calculator works out that hidden rate and compares the 0% plan with taking the cash price and borrowing it.

The FTC's guide to car financing notes that dealers may offer manufacturer incentives such as lower finance rates or cash back; the arithmetic is the same for a phone, a sofa or a store instalment plan. Enter both prices, or one price and a percentage, and a different loan term if you would borrow for longer.

How to use

Choose what you know: both prices, the financed price and a discount for paying cash, or the cash price and a financing markup.
Enter the term of the 0% plan, the loan rate and any down payment.
If the loan would run for a different term, tick the box and enter it.
Add any fee or required insurance on the 0% plan in the extra fields.
Compare the payments and totals, then read the hidden rate, the Working lines and the table by rate.

The hidden rate of a 0% offer

Say a car costs 30,000 with 0% financing over 36 months, or 27,500 with 2,500 cash back. Taking the 0% plan is the same as borrowing 27,500 and repaying it with 36 payments of 833.33. A loan with those payments charges 5.74% a year, and that is the rate hidden in giving up the rebate.

The calculator finds the monthly rate at which the plan's payments repay the cash price and multiplies it by 12. The 2,500 gap is also 9.09% on top of the cash price, or 8.33% off the financed price; both percentages are shown.

The bigger the rebate and the shorter the plan, the higher the hidden rate: 4,000 cash back on 30,000 is 9.54% a year over 36 months but 5.78% over 60.

Hidden annual rate of the 0% plan with no down payment or fees. Worked out with this calculator.
Cash back on 30,000	36 months	48 months	60 months
1,000	2.21%	1.67%	1.34%
2,000	4.53%	3.42%	2.75%
3,000	6.97%	5.26%	4.23%
4,000	9.54%	7.2%	5.78%

0% financing or cash back: which is cheaper

Over the same term the rule is simple: take the cash back and a loan if the loan's rate is below the hidden rate. In the example a 6.5% loan on 27,500 costs 30,342.51 in total, 342.51 more than the 0% plan. At 4% it costs 29,228.75, and the rebate wins by 771.25.

A 27,500 loan over 36 months against 30,000 at 0% over the same term. Worked out with this calculator.
Loan rate	Payment	Loan in total	Cheaper
4%	811.91	29,228.75	loan by 771.25
5%	824.20	29,671.19	loan by 328.81
6.5%	842.85	30,342.51	0% plan by 342.51
10%	887.35	31,944.52	0% plan by 1,944.52
15%	953.30	34,318.68	0% plan by 4,318.68
20%	1,022.00	36,791.95	0% plan by 6,791.95

Down payments and longer loans

A down payment comes off both sides, but it only removes interest from the loan. The same 2,500 gap then sits on a smaller balance, so the hidden rate rises: with 5,000 down it goes from 5.74% to 6.97%, and the 6.5% loan becomes 174.31 cheaper than the 0% plan.

A longer loan lowers the payment but adds interest, so only the totals can be compared. 27,500 at 6.5% over 60 months is 538.07 a month but 32,284.14 in total, 2,284.14 more than the 36-month 0% plan. Tick the different-term box and the calculator shows the rate below which the longer loan would win, here 3.48%.

The FTC also points out that special low-rate programmes may require a larger down payment or a shorter contract, so compare the terms you would actually get.

Store plans and paying in instalments

The same method works away from the car lot. A phone at 1,200 over 12 interest-free payments, or 1,080 paid now, hides 19.91% a year. A loan or card at 24% would cost 1,225.49 in total, so here the plan is the cheaper way to spread the cost.

Short plans make the same discount expensive: 10% off for paying now is 65.51% a year against a 3-month plan and 10.33% against a 24-month one. Whether a plan counts as a loan and appears on your credit file depends on the country and the provider; this page does only the arithmetic.

What this calculator shows

The payment and total for the 0% plan and for a loan on the cash price
The hidden annual rate of the 0% offer
The price gap as a markup and as a discount
The rate below which the loan wins when the terms differ
The loan's total at rates from 5% to 40% next to yours

What to keep in mind

The loan is amortising: equal monthly payments with interest on the remaining balance.
Fees and insurance on the 0% plan are split evenly across its payments.
The hidden rate is the monthly rate × 12, with payments a month apart.
When the terms differ, totals are compared as plain sums of payments.

Where the numbers come from

Checked against the standard annuity payment formula; dealer incentives as described in the FTC guide “Financing or Leasing a Car” · verified September 2026.

FAQs

Is 0% financing or cash back better?

Over the same term, take the cash back and a loan if the loan's rate is below the 0% plan's hidden rate. On a 30,000 car with 2,500 cash back over 36 months that rate is 5.74%: a 6.5% loan costs 342.51 more, a 4% loan 771.25 less.

How do I find the hidden interest rate of a 0% offer?

You need the financed price, the cash price and the term. The calculator finds the rate at which a loan on the cash price has the same payment as the 0% plan: 36 payments of 833.33 against 27,500 up front is 5.74% a year.

How much is the monthly payment on a 0% plan?

(Price − down payment + fees) ÷ number of months. 30,000 over 36 months is 833.33 a month; with 300 of fees it is 841.67.

Why does a down payment make the rebate look better?

It shrinks the balance while the price gap stays the same, so the hidden rate rises. With 5,000 down on the 30,000 car the rate goes from 5.74% to 6.97%, and a 6.5% loan becomes 174.31 cheaper.

How do I compare a 36-month 0% deal with a 60-month loan?

By totals only: the longer loan has a lower payment but more interest. 27,500 at 6.5% over 60 months totals 32,284.14, 2,284.14 more than the 0% plan. With different terms the calculator shows the break-even rate, here 3.48%.

What is the financing markup as a percentage?

Price gap ÷ cash price × 100: 2,500 ÷ 27,500 = 9.09%. Measured from the financed price the same gap is an 8.33% discount. You can enter either percentage instead of a second price.

Why is a short 0% plan with a cash discount so expensive?

The same price gap is spread over fewer months. 10% off for paying now is 65.51% a year against a 3-month plan, 19.91% against 12 months and 10.33% against 24 months.

Do fees on the 0% plan change the answer?

Yes. A fee or required insurance is added to the plan's total and spread across its payments, which raises the hidden rate. Enter it in the extra fields.

Worked example

A 30,000 car: 0% for 36 months or 2,500 cash back

Input: 0% over 36 months, or 27,500 borrowed at 6.5% over 36 months

Output: The 0% plan is cheaper by 342.51; its hidden rate is 5.74%

Note: Payments of 833.33 and 842.85. With a loan at 4% the cash back would win by 771.25.

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