How long should I wait before applying for a car loan?
I started my new job two months ago and I'm being paid a much higher salary. I'm wondering how long I should wait before applying for a loan.
That depends. The income of an individual doesn’t usually play a direct role in the interest rate given by a lender. The borrower’s credit and debt-to-income ratio are far more important. That said, a higher income could allow you to shorten the length of the term of the loan. While this would equate to higher payments, it would also lessen the amount of interest you pay over the life of the loan. A higher salary can also give you more money for a down payment, which can lower both your loan payments and the amount of interest paid.
Another consideration is whether the Federal Reserve is planning on raising or lowering interest rates in the near future. Sometimes, waiting too long can result in higher interest rates and vice versa. So keep your eye on the financial news if you’re planning on waiting. Otherwise, you might miss out.
Did this answer help you?
Ask us a question by email and we will respond within a few days.
Have a different question?
You can meet us at our office and discuss the details of your question.
Read advice from car experts at Jerry
Browse by topics
What others are asking
What's included in a CLUE report?
"What information do insurance companies get from CLUE? I just found out that insurance companies share this database."
Jul 28, 2021
Can health insurance cover medical bills from a car accident?
I was in a car accident and was injured. I have medical bills from the accident. Will my health insurance cover them?
Sep 10, 2021
Should you cosign a car loan for someone who's not a family member?
"A buddy of mine wants me to cosign for his car loan, but I have my reservations, especially if I'm on the hook for 72 months. Should you cosign for someone who isn't a family member?"
May 28, 2021