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Cash Back or Low Interest Calculator

Compare a cash discount plus a regular loan against a low-rate offer, with the break-even discount.

By Nitin Raturi · Last reviewed

The two offers

How to use the Cash Back or Low Interest Calculator

Compare a cash discount plus a regular loan against a low-rate loan with no discount.

  1. Enter the amount you would finance before the discount.
  2. Enter the cash back and the two interest rates.
  3. Enter the tenure in months.
  4. Read which option costs less and the break-even discount.

Good to know

  • If the discount is more than the break-even amount, take the discount.
  • Fees, insurance and prepayment charges are not included.

Amount to finance

The on-road price less your down payment, before any cash discount.

How to fill it in

  • Enter ₹10,000 to ₹10 crore.
  • Accepts 8 lakh, 8L or 800000.

Cash back or discount

The discount you get if you skip the low-rate offer and use your own loan.

How to fill it in

  • Enter ₹0 up to less than the amount financed.

Example

On ₹8 lakh over 5 years at 6.99% against 9.5%, a discount above ₹45,915 is the better deal.

Low-rate offer

The dealer or promotional rate, which comes without the discount.

How to fill it in

  • Enter 0% to 30% a year. Enter 0 for a no-cost EMI offer.

Example

A 0% offer on ₹5 lakh for 3 years is ₹13,889 a month.

Keep in mind: Check for processing fees or a higher price hidden in a low-rate or no-cost offer.

Regular loan rate

The rate on the loan you would take if you chose the discount, from your bank or lender.

How to fill it in

  • Enter 0% to 30% a year; use the rate actually offered to you.

Tenure

How many monthly EMIs, the same for both options.

How to fill it in

  • Enter 6 to 120 months.

Example

With a ₹20,000 discount, the low rate wins by ₹32,656 over 5 years.

Cheaper option

Take the cash back: save ₹5,147

Low rate: ₹15,837 a month, ₹9,50,231 in all. Cash back: ₹15,751 a month, ₹9,45,084 in all. A cash back above ₹45,915 beats the low rate.

Low rate: borrow
₹8,00,000 at 6.99%
Low rate: interest
₹1,50,231
Cash back: borrow
₹7,50,000 at 9.5%
Cash back: interest
₹1,95,084
Break-even cash back
₹45,915

Both loans run 5 years with EMIs at month end and a monthly rate of the annual rate ÷ 12. Fees, insurance, GST on charges and prepayment are not included.

ChangelogHow we test this calculatorEmbed this calculator

How this calculator works

  1. Step 1Low ratefull priceBorrow the whole amount at the offer rate.
  2. Step 2Cash backprice − discountBorrow less, at your regular loan rate.
  3. Step 3Comparetotal paidSame tenure, so the lower EMI wins.

Dealers often offer either a low interest rate or a cash discount, not both. The calculator works out the EMI and total paid for each option.

Each EMI uses the standard reducing-balance formula with a monthly rate of the annual rate ÷ 12. Both loans run for the same number of months.

Worked example: ₹8 lakh over 5 years

₹50,000 off at 9.5%, or no discount at 6.99%
EMI
P × r ÷ (1 − (1 + r)⁻ⁿ), r = annual ÷ 12
  1. Low rate EMI₹8,00,000 at 6.99%, 60 months₹15,837
  2. Low rate total₹15,837 × 60₹9,50,231
  3. Cash back EMI₹7,50,000 at 9.5%, 60 months₹15,751
  4. Cash back total₹15,751 × 60₹9,45,084
  5. Cash back saves₹5,147

The discount is worth more than the rate cut here. Any discount above ₹45,915 beats the 6.99% offer.

Read the result

  • Low rate, no discount₹9,50,231
  • ₹50,000 off at 9.5%₹9,45,084
  • ₹20,000 off at 9.5%₹9,82,887
Total paid over 5 years on ₹8 lakh

The break-even discount is ₹45,915. A ₹20,000 discount falls short, so the low rate saves ₹32,656.

No-cost EMI offers

  • 0% offer₹13,889A month, ₹5,00,000 in all, if there are truly no fees.
  • ₹25,000 off at 10%₹15,327A month, ₹5,51,769 in all.

Against a 10% loan, a discount would need to exceed ₹69,566 to beat a genuine 0% offer.

Assumptions and limits

  • FeesProcessing fees and GST on them are not included.
  • Same tenureBoth loans run the same months.
  • Fixed ratesRates stay the same for the whole loan.
  • No prepaymentPaying early changes the comparison.

A dealer offer is a loan with a price attached. Other tools check the loan and the alternatives.

For the EMI on the on-road price, use the car loan calculator. The APR calculator adds fees into a single yearly rate, and a lease is covered by the auto lease calculator.

Common mistakes

  • Mistake: Comparing EMIs over different tenures.

    Instead: Use the same tenure, or compare total cost.

  • Mistake: Ignoring fees on a low-rate offer.

    Instead: Add any fee to the amount financed for that option.

  • Mistake: Assuming a no-cost EMI is free.

    Instead: Check whether the price was raised or a discount withdrawn.

Checking the method

A separate script finds each EMI by stepping the loan month by month, without the EMI formula, and matches the OpenStax $28,500 car-loan example to the cent.

Read how we test our calculators, or browse more money calculators.

Frequently asked questions

Is ₹50,000 off at 9.5% better than 6.99% on ₹8 lakh over 5 years?

Yes. The discount option costs ₹9,45,084 in all against ₹9,50,231, saving ₹5,147.

What is the break-even cash back?

The discount at which both options cost the same. For ₹8 lakh over 5 years at 6.99% against 9.5% it is ₹45,915.

When is the low rate better?

When the discount is below the break-even. A ₹20,000 discount in the same example loses by ₹32,656.

How does a 0% EMI offer compare?

On ₹5 lakh for 3 years, 0% is ₹13,889 a month. A discount must beat ₹69,566 if your other loan is at 10%.

Does it include processing fees?

No. Add a fee to the amount financed for the option that charges it, or compare the fee with the saving shown.

Sources and methodology

The formulas are standard time-value-of-money results. We check every figure against golden values worked out independently, by closed form and by month-by-month simulation; see the methodology.

Written and maintained by Nitin Raturi, a software engineer (about the author). Last reviewed 4 Nov 2026; next review due by . Found an error? Tell us.

Changelog

  • : Initial release.

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