What are the different ways that a car loan is structured?

I know that interest rates have an impact on how much you pay for a loan, but I'm not exactly sure how it works on the structure of a car loan. Can you explain it?

Answer
Your question is definitely an interesting one, so we’ll try to break it down step by step. Loan terms typically range from 24 to 84 months, although longer or shorter terms are available to some borrowers.
The structure of a car loan essentially works like this:
  • You want to buy a car, but you don’t have the money.
  • A lender agrees to let you borrow money based on your income, your credit, and a few other factors.
  • If you get accepted, you pay the borrowed amount of money back over a length of time plus interest.
  • If you don’t pay, the lender has the legal right to take the car and sell it at auction to recoup the money owed.
Car loan interest is calculated as simple interest, meaning that your interest is figured off the remaining principal of the loan.
To get a car loan, you’ll likely need to have full coverage insurance. Download the Jerry app to find the best quotes from over 40 insurers and get the most for your money.
Eric Schad
Answered on Nov 18, 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.
thumb-up

Did this answer help you?

Ask us a question by email and we will respond within a few days.
thumb-up

Have a different question?

You can meet us at our office and discuss the details of your question.
Let Jerry’s experts help you find savings on your car insurance!
No long forms or spam · Get quotes from 40+ carriers
Find insurance savings (100% Free)
rating primary
4.7/5 Rating on App Store

Easiest way to compare and buy car insurance

√
No long forms
√
No spam or unwanted phone calls
√
Quotes from top insurance companies
Find insurance savings — it's 100% free