Zero Percent Financing or Cash Back. Which is better?

Let's say you are looking at a $20,000 car and you can either finance at 3.99% APR* for 60 months with $2,500 rebate or get 0% financing. So how do you know which is the best deal? You have to do your math. Here's an example.

Interest Rate	0% APR*	3.99% APR*
Purchase Price	$20,000.00	$20,000.00
Rebate Amount	$0.00	$2,500.00
Amount Financed	$20,000.00	$17,500.00
Cost of Interest	$0.00	$1,834.31
Cost of Vehicle	$20,000.00	$19,334.31
*APR = Annual Percentage Rate

Giving up the rebate is like paying your interest in advance, so you are checking to see if the interest you would pay is more than the rebate. In this case, taking the 0% will end up costing you $665.69 more than taking the rebate and financing the loan. Every situation is different, so as you shop use your own numbers and you'll know if you are getting the best deal possible.