If you are in the process of financing a new vehicle with a bad credit finance loan, you may be wondering if a rebate can be used and if it will help you. The answer is a resounding "yes."
A rebate with a bad credit finance loan works in pretty much the same as it would with a regular loan. As long as the rebate is entered on the bill of sale below the selling price and listed as a down payment (as opposed to reducing the selling price of the vehicle), most subprime lenders will allow you to use at least a portion of the amount as money down. Customer cash works in the same way and since it is "cash", it is always entered on the down payment line. Some bad credit lenders still ask for some actual cash from the customer in addition to the rebate, while many of them will accept the entire amount as the down payment.
A good example of the difference dealer cash can make is the new Kia Rondo.
Let's price out a the new Rondo. The LX model with the V-6 engine and automatic transmission also includes 4 wheel disc brakes with ABS, Electronic Stability Control, power windows, locks and all the air bags. The MSRP is $19,495 and dealer invoice is $18,395. If you subtract the customer cash, the selling price at invoice is $14,395. With tax and fees (estimated), we're looking at an amount to finance of about $15,700 for a vehicle with a 10 year 100,000 mile powertrain warranty and a 5 year, 60,000 mile basic warranty. Factor in the savings you'll realize by not having to buy an extended warranty (at least $1,000) and you have a really great vehicle for a bad credit finance loan.
If you would like other examples there are several
auto loan calculators online that let you compare new cars, rebates, and interest rates side by side.