When interest rates are low, some automobile dealers offer loans at 0% APR, as indicated in a 2016 advertisement by a prominent car dealership, offering 0% financing or cash back deals on some models.

Zero percent financing means the obvious thing-- that no interest is being charged on the loan. So if we borrow $1200 at 0% interest and pay it off over 12 months, our monthly payment will be $1200/12= $100.

Suppose you are buying a new truck at a price of $22,000. You plan to finance your purchase with a loan you will repay over two years. The dealer offers two options: either dealer financing with 0% interest or a $2,200 rebate on the purchase price. If you take the rebate, you will have to go to the local bank for a loan (of $19,800) at an APR of 6.5%.

What would your monthly payment be if you took the rebate?