Question regarding rebate on car or gas credit?

Question

Which would be the better savings for me .. I just purchased a new car and I was offered a rebate of 1750.00 or gas for 2.99 for three years with a maximum of 500 gallons per year?

Answer 1

Take the rebate.  No brainer.  Depending on your financial situation, you may want to apply that money to debt reduction, shortening your auto loan, or investing it in an IRA.

The gas card thing is a marketing gimmick.

Answer 2

I would take the rebate

Answer 3

you have to guess the price of gas in the next 3 years and do the math at $4gal. take rebate also rebate is upfront money

Answer 4

Do the math.  Take the price of gas in your area now (4.10 for me) and subtract 2.99.  Then multiply the difference by 500 gallons for a yearly savings.  Then multiply that by 3 years to determine your total savings.  Of course, this method does not account for rising gas prices, which will only improve your savings.

4.10 - 2.99 = 1.11 x 500 = 555.00 x 3 = $1665 vs $1750.

However if the price of gas goes up (yeah, like it won't?) then you will be saving even more.  The difference really is whether you want it now, or over 3 years.

Answer 5

The $1750 is cash right now. The fuel offer would  come to 1500 gallons *2.99 =  $4485 you would have to SPEND over the period, if you use that much. Work this out from multiplying your expected mileage by about 3/4 the promised consumption figure.

BUT your SAVING is only "today's price minus $2.99". The total value of the deal depends entirely on what "today's price" is going to be over the next 3 years. Right now today this deal is worth about $1500, as gas is around $4 (IF you use the whole 500 galls). The world crude price has just dropped a little but no difference at the pumps yet!!!

You will be more in front as gas prices keep going up. In the less likely event that gas prices fall below $2.99, you will be better off buying the cheaper on the open market, so you will nothing from the deal. This part of the deal you need to judge for yourself, which way you think prices will go. (Hint, not likely to go down as fast as they can go up).

BUT you need to check out

a) how restricted you are in where you can get the discount: is this going to suit you

b) are they a solid enough business to still be around for that 3 years.

Personally I'd take the deal, as I don't believe gas prices will go very low anytime soon. Also in those 3 years you might find yourself with lower or no income, so your spending on gas would be a critical part of your budget, and a lower price a big blessing. Don't take the rebate if you are only going to spend it on a luxury item like a new TV as that will not help you at all if/when fuel goes $9 a gallon.

Answer 6

Well, let's see:

1) Are you going to use the full 500 gal per year?  I'll guess that your car gets about 30mpg.  So, 500 gallons will take you 15,000 miles.  If your car only gets 25mpg then it'd be more like 12,500 miles.  Do you drive that much in a year?  If not, how many gallons do you think you'll use?  Only you know that.

2) Let's assume you use the full 500 gallons per year, which is 1500 gallons in 3 years.  Multiply by $2.99, and you'd pay $4485 for that gas.  But if you took the rebate, let's say gas averages $4.16 over those 3 years (unlikely) - you'd pay $6240 for those 1500 gallons, but you'd get $1750 back, so you'd really be out $4490.

So it looks like:  If you think you'll use the full 500 gallons/year, you should take the cheap gas if you think gas will average more than $4.16 during those 3 years.  If you'll use less gas, then the break-even price per gallon will be higher.