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How much should I ask for on a car loan?
I need to get a car loan, but I’m not exactly sure what my budget should be. How much should I request on a car loan?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
How much to ask for on a
car loan
depends on your financial situation and budget. However, you should never ask for more than you can afford. In most cases, lenders will only provide you with 100% to 120% of the value of the car (also known as the loan-to-value ratio), but this is based on your income, debt-to-income, and credit.A good rule of thumb is to spend less than 10% of your post-tax income on your car payment and no more than 20% of your take-home on all car-related expenses.
For example, if you make $5,000 a month after taxes, don’t spend more than $500 on your car note. Additionally, don’t spend more than $1,000 a month on your car note, gas, insurance, and maintenance.
If you can adhere to this rule, you should find yourself within budget and without any struggles making your payments on the car and your car insurance.
But half the battle is finding the lowest rates possible. For both your car loan and your car insurance, make sure to shop around as much as possible. You may have to shop around for car loans on your own, but for car insurance, let the Jerry app do the heavy lifting.
As a licensed broker,
Jerry
helps you find and compare quotes from over 50 top providers in minutes. When you find a better rate, Jerry can help you buy your new coverage and even cancel your old policy!View full answer
- Gregory R.
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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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