Comparing written used-car loan offers with a worksheet

The short answer

To compare used-car loan offers fairly, put each written offer in its own column and record the same items for every one: the vehicle, its price, your down payment, the amount financed, the APR, the term, the payment amount and count, any different final payment, fees, and optional products. Then add up every scheduled payment for each offer and check that sum against the lender's own stated total. Compare offers only when they cover the same vehicle and the same down payment. If they don't, the worksheet should show that difference openly. A lower monthly payment doesn't make an offer cheaper. The total you will pay, the APR, and what is bundled into the amount financed tell you more.

A few terms come up throughout this guide. The amount financed is the sum you are borrowing, which may include fees or add-on products rolled into the loan. The APR (annual percentage rate) expresses the yearly cost of credit, including certain finance charges, as a single percentage. It can differ from a plain "interest rate" quoted elsewhere on the paperwork. The term is the length of the loan, usually in months. In the US, federal Truth in Lending rules require lenders, including dealers who arrange financing, to disclose the APR, finance charge, amount financed and total of payments on consumer credit contracts. Look for those figures on each written offer.

What to put on the worksheet

You don't need a special PDF or template. A sheet of paper or a blank spreadsheet works. Use one column per dated written offer and one row per item below. Next to each figure, note the document and page it came from so you can go back and question it.

• Lender or dealer name and the date of the offer
• Vehicle identity: year, make, model, trim and VIN if listed
• Vehicle price used in the offer
• Down payment and any trade-in credit
• Amount financed
• Quoted interest rate, with the exact wording the offer uses for it
• APR, where stated
• Term in months
• Payment frequency (monthly, biweekly and so on)
• Number of payments and amount of each
• Any final payment that differs from the regular payment
• Fees, listed one by one
• Optional products such as service contracts, GAP coverage or credit insurance, with their prices
• Lender-stated total of payments
• Your calculated scheduled payment sum
• Notes and unresolved questions

Sorting out fees and add-ons

Fees and optional products are where offers most often stop being comparable. For each one, mark whether the offer shows it as financed (added to the amount financed), paid separately up front, included in another figure, or unresolved. An item you can't place goes in the unresolved column, and you ask the lender about it before deciding.

Ask each lender the same three questions. What does the quoted rate represent, and is it the APR? What makes up the amount financed? How was the payment calculated? Also ask whether there is any penalty for paying the loan off early, because that affects how much flexibility you have later. Optional products are usually optional by definition, so request a version of the offer without them if you want to see the base loan on its own.

The arithmetic

The core calculation is simple addition. The scheduled payment sum is every payment on the schedule added together, including a final payment if it differs from the others. If you also want a cash-outlay figure, you can add the down payment and any fees you pay separately. Count each amount only once, and label exactly what your subtotal includes.

Hypothetical example: an offer has 48 identical monthly payments of $250, no different final payment, and a $100 fee paid separately. 48 × $250 = $12,000 in scheduled payments. Add the $100 fee for a subtotal of $12,100. This subtotal does not include the down payment. Write those assumptions next to the result so the figure can't be misread later.

Compare your scheduled payment sum with the total of payments the lender states. If they don't match, ask why. Common reasons are a different final payment, rounding, or an item you placed in the wrong category. Don't try to work out the APR from these totals. Use the APR the lender discloses, and ask for it in writing if it's missing.

In a spreadsheet, you can lay this out so the totals update automatically. In the sketch below, column B holds one offer. Spreadsheet programs such as Excel and Google Sheets also include a PMT function. You can use it as a rough check that a quoted payment is in the right range for the stated rate, term and amount financed. Small differences are normal because lenders may round or count days differently, so treat PMT as a cross-check only. It does not replace the lender's figures.

Row  Item                              Column B (Offer 1)
 5   Amount financed                   12000
 6   APR (as decimal)                  0.069
 7   Term (months)                     48
 8   Regular payment                   250
 9   Number of regular payments        48
10   Different final payment (or 0)    0
11   Fees paid separately              100
12   Down payment                      2000
13   Scheduled payment sum             =B8*B9+B10
14   Sum + separate fees               =B13+B11
15   Sum + separate fees + down        =B14+B12
16   PMT cross-check (estimate only)   =PMT(B6/12,B7,-B5)

Note: if the final payment differs, set B9 to the count of
regular payments only, so the final payment is not counted twice.

The numbers in that sketch are placeholders that show the layout. They do not come from a real offer.

Choosing between offers

Once every offer is on the same basis, weigh them on shared criteria rather than on the monthly payment alone.

Criterion	What to look at	Trade-off
APR	Disclosed APR on each written offer	Lower APR generally means lower credit cost for the same amount and term
Term	Number of months	A longer term lowers each payment but usually raises the total paid and keeps you in debt longer
Total of payments	Lender-stated total and your scheduled sum	Best single figure for comparing cost when amount financed and down payment match
Amount financed	What is included beyond the vehicle price	Rolled-in fees and add-ons raise the total even when the rate is attractive
Payment amount	Regular and final payments	Must fit your budget; a low payment can hide a long term or a large final payment
Flexibility	Early-payoff terms, payment frequency	Matters if you expect to pay off early or refinance

Hypothetical illustration: Offer A asks for 48 payments of $250, which totals $12,000. Offer B asks for 60 payments of $215, which totals $12,900. Offer B is easier on the monthly budget but costs $900 more over the life of the loan. Which one is right depends on your constraint. If the $250 payment fits comfortably, the shorter loan costs less overall. If it doesn't, the longer loan may be the realistic choice, but you should know what it costs you. Longer loans also make it more likely that you'll owe more than the car is worth for part of the term, which matters if you might sell or trade it early.

If two offers differ in vehicle price, down payment or amount financed, their totals aren't directly comparable. Either ask the lenders to requote on the same assumptions, or add a row that shows the difference so it's visible when you decide. A pre-approval from a bank or credit union, set against the dealer's arranged financing for the same car and down payment, is one practical way to get two comparable offers in hand.

Before you sign

• Confirm that every column uses the same vehicle and down payment, or that the differences are shown.
• Check that your scheduled payment sum matches the lender's total of payments, or that you have an explanation for any gap.
• Clear every item from the unresolved column.
• Make sure the final contract's APR, amount financed, term and payment match the written offer you chose.
• Keep the worksheet and the offer documents together.