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How much should you spend on a car loan?

What is a good amount to spend on a car loan? I want to get my first car but I’m not sure how much money I should be spending on a loan.

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Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
It’s ultimately up to you to decide how much you want to spend on a car loan. On average, people currently pay $568 per month for a new car loan and $397 per month for a used car loan. However, your loan payments will be determined based on the cost of your car, your loan term, and the APR set by your lender, so some of the factors are out of your control.
Here are some tips that will help you get a good rate on a car loan:
  • Have a good credit score
    . Your APR is largely based on your credit score, so having good credit will help you get a much lower interest rate.
  • Make a large
    downpayment
    . The more money you’re able to pay at signing, the more affordable your loan will be.
  • Choose an affordable car. Remember, the ultimate deciding factor for the cost of your loan is the cost of the car itself.
  • Find the right lender. Some lenders will offer better rates than others, so it’s a good idea to shop around to learn more about your options.
  • Choose the right repayment period. Loans with longer terms will cost more over time but will have much lower monthly payments.
While you’re looking for the best rates on car loans, why not shop for better insurance rates, too? It’s easy when you use the
Jerry
app! Just download the app and answer some quick questions to see your policy options in a comprehensive list. When you find a quote you like, Jerry can help you cancel your old policy and sign up– for free.
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