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How much do you need for a car loan?

I’m 55 years old and have spent my entire life living in major cities where it wasn’t necessary to own a car. However, I recently moved to the suburbs to be closer to my children and grandchildren and need to purchase my first car. I understand the basics of how a car loan works, but how much do I need? Are there fees or mandatory down payments?

avatar
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
That sounds like quite a significant move, and I’m sure your children and grandchildren will appreciate having you nearby!
The good news is that when you apply for a
car loan
, **there are no out-of-pocket fees or mandatory
downpayments
**.
That said, it is recommended you put down at least 20% of the vehicle’s price. Having a
downpayment
of 20%, or more if possible, has many benefits such as:
  • Increasing the likelihood of approval
  • Lowering your monthly payments and total interest paid
  • Offsetting the effects of depreciation and avoiding an
    upside-down car loan
Additionally, to find the most favorable agreement and avoid overpaying for your loan, you should shop around and compare offers from multiple lenders, including:
  • Local and national banks
  • Credit unions
  • Online lenders
  • Dealerships
Finally, after finding your new car and being approved for a loan, you’ll need to insure the vehicle with a full coverage
car insurance
policy, which can get pricey.
If you want to ensure you’re getting the best rate on your insurance policy, use
Jerry
, an insurance comparison app that can collect quotes from more than 50 top insurance companies, like Travelers, Nationwide, and Progressive, in seconds! Their friendly agents do all the paperwork for you, and if you ever have any questions, agents are just a text away.
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