Is getting a car loan a good idea or a bad one?

I was thinking about getting a car loan for a new car, but my friend says it's a terrible idea financially. Is this true? What are the pros and cons?

Answer
Like many other decisions in life, getting a car loan is entirely up to you and your own circumstances. Whether it’s a good idea is highly dependent on your financial situation, your credit, and your threshold for holding debt. Some pros of getting a car loan are:
  • You don’t have to spend a ton of money upfront
  • Credit-building
  • You can get more cars if you don’t have the money upfront
However, there are still cons, including:
  • You pay interest
  • You have to pay fees and taxes
  • You’re locked into a car note each month for years
  • A car is a depreciating asset
Keep in mind that if you get a car loan, you also have to pay for full coverage car insurance for the duration of the loan, which can be a pricey venture. So if you decide to take out a car loan, do yourself a favor and head over to the Jerry app. We’ll get you personalized quotes from top providers, so that all you need to do is pick the plan that works best for you. And once you pick, we’ll even help you switch!
Best of luck weighing the pros and cons!
Eric Schad
Answered on Dec 13, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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