Put the offers on the same basis
Start with the same vehicle, the same itemized charges, and the same cash and trade contribution. If one quote finances more money, part of its payment difference comes from the principal rather than the rate. Ask each lender for the amount financed, APR, number of payments, payment amount, and total payment disclosures.
The CFPB recommends comparing the total borrowing cost as well as the monthly payment. A longer term can lower the payment while increasing the total cost. APR helps compare credit costs, but you should still read the actual fees and payment schedule.
Two payments that tell different stories
Consider two invented offers that each finance $30,000. For this simplified illustration, use fixed annual rates of 6% and 8%, monthly payments, no separate finance fees, and payments made on schedule. Amounts below are rounded to the nearest dollar.
| Offer A | Offer B | |
|---|---|---|
| Amount financed | $30,000 | $30,000 |
| Annual rate | 6% | 8% |
| Loan term | 60 months | 72 months |
| Estimated payment | $580 | $526 |
| Estimated total interest | $4,799 | $7,872 |
| Estimated total payments | $34,799 | $37,872 |
Offer B lowers the estimated monthly payment by about $54, but continues for another year and adds about $3,073 in total interest. Those are separate tradeoffs. A smaller payment does not establish that the vehicle price or loan is cheaper.
Compare one change at a time
First keep the amount financed and term fixed while comparing rates. Then hold the amount and rate fixed while changing the term. This shows which decision produces each difference. Finally, compare the actual complete offers, since lenders may quote different terms or fees.
Car Deal Check’s Compare APR tab compares two rates on the same amount and term. To compare different terms, run the two scenarios separately and record each payment and total interest. Treat any example inputs as illustrations; replace them with your written offers.
Understand the estimate
The calculator uses the standard fixed-payment amortization formula: principal multiplied by the monthly rate, divided by one minus the monthly growth factor raised to the negative number of payments. At zero interest, it divides principal by the number of payments.
For an estimate, the entered APR is used as the annual rate. When the disclosed APR includes fees, it may differ from the contract’s interest rate. Daily interest accrual, payment dates, fees, rounding, or a different final payment can cause the lender’s schedule to differ. The signed loan disclosures remain the reference.
Leave room for owning the car
A payment comparison is only one part of your budget. Separately consider insurance, maintenance, fuel or charging, and other running costs. The CFPB highlights total ownership cost as part of comparing offers.
- Are both quotes financing the same amount?
- Is the APR different from the contract interest rate, and why?
- Are there fees or products financed in only one offer?
- What is the total of payments for each offer?
- What are the contract’s early-payment terms?