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How does financing a car work?
I want to buy a new car, but I don't have the money to pay cash. I'm also not sure how financing works. Could I get an explanation so I know what to expect?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“Auto financing is a process where a lender gives you money to buy a vehicle and uses that vehicle as collateral for the loan. In return, you get to drive the car, but you have to pay back the loan amount (principal) with interest (APR) as stated on your contract within a certain time frame (usually 48 to 84 months).
To secure financing, you’ll have to show proof of income and have decent to good credit; you may also need to make a down payment.
Keep in mind that if you finance a car, you’ll also likely be required to carry
collision coverage
and comprehensive coverage
on your car insurance. Make sure to budget for this and to shop with Jerry
to get the best rates from dozens of insurance companies.”View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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