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Is a car loan an installment loan?
I’m trying to understand how car loans work since I’m shopping for a new car. But I’m confused—is a car loan considered an installment loan?
Chloe Jenkins · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Yes,
car loans
are a type of installment loan. As with any installment loan, car loans allow a person to borrow a large amount of money that is repaid in monthly installments over a pre-determined timeframe at a fixed interest rate.Car loans are a widely utilized way to buy a car when you don’t have the full amount on hand to pay for the car outright. Lenders will front the cash for the vehicle, and you will pay it back over a specified number of months (usually between 36 and 72).
Borrowers are upcharged in the form of interest and service fees. These are specified upon loan approval and referred to as your APR.
The lower the APR, the better the loan is for you and your wallet. But even if your initial car loan doesn’t have the greatest APR, you can refinance into a lower-interest-rate loan down the line to reduce your monthly bills and/or total interest owed.
The
Jerry
app is a great resource for comparing refinancing options from multiple lenders. Jerry makes it easy by finding the best lenders at the best rates and delivering the lowest-cost refinancing options directly to your phone!View full answer
- Gregory R.
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