How much should I apply for on my car loan?

I’m new to car buying and loans in general. If I get a car loan, how much should I be applying for?

Answer
Understanding how to get a car loan and buying a car when you’re unfamiliar with either can be overwhelming. Thankfully, there is a general amount you should spend on a car.
When you go to finance a car, you should also stick to the 20/4/10 rule. This rule states to put 20% of the vehicle’s cost as your down payment, finance the car for no longer than four years, and keep your monthly payments at or lower than 10% of your monthly income.
While this rule is ideal, it doesn’t always work out this way. There are a lot of factors that contribute to the amount you qualify for, including:
  • Credit score and history
  • Income
  • Type of vehicle you’d like to finance
For this reason, it’s best to shop around and get quotes with different lenders. Shopping around and getting preapproved for loans will give you the best idea of what lenders are willing to let you borrow. From there, you can determine how much you can spend on a monthly car payment and what is achievable with the amounts your preapproval amounts.
Even if you end up in a loan that is a little less than ideal, you can always refinance with the Jerry app.
Jerry allows you to compare quotes from multiple lenders without worrying about your credit history. Avoid the hassle of researching and sending documents to potential lenders. Jerry’s app instantly connects you with top companies and accounts for your specific financial needs to find a loan that works for you.
Chloe Jenkins
Answered on Nov 16, 2021
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