What do I need for a car loan?

For most of my life, the car I've had was a reliable used car I bought from a neighbor. I've always wanted a new car, but I couldn't afford it until I got the job I have now. I've been saving up and think I have enough for a decent down payment. But I need a car loan for the rest. How do you get a car loan?

Answer
Getting your first new car is exciting, and a loan will help get the keys in your hands faster!
To apply for a car loan, you’ll need to figure out the vehicle you want, gather the necessary documents, check your credit score, research lenders, and determine the down payment you can afford.
Dream car: The more you know about the vehicle you want, the better. This includes:
  • Make
  • Model
  • Year
  • VIN (vehicle identification number)
  • Price
Documents: The lender will need certain information to gauge how financially responsible you are and determine what kind of deal to extend to you. This may include:
  • Proof of identity
  • Proof of residence
  • Proof of income
  • Proof of insurance
Credit: Your credit score is used to determine the loan’s interest rate and fees. The higher your score, the lower-APR loan you’ll qualify for. A good credit score is 660 or higher. Those with lower scores may require a cosigner to get approved.
Types of lenders:
  • Local or national banks
  • Dealerships
  • Online lenders
Down payment: This is how much money you are willing to pay up front toward the car’s sticker price. The more you can pay at the beginning, the less you’ll pay later in interest. A larger down payment can also help your chances of getting approved for the loan, as you’ll need to borrow less money. Aim to put down 20%.
Best of luck securing the loan and getting the keys to your dream car!
When the time comes to drive off the lot, remember that you’ll need car insurance. If you want to save money on car insurance, the Jerry app is a good place to start. A licensed broker, Jerry does all the hard work of finding cheap quotes from the top name-brand insurance companies and buying new car insurance. The average Jerry user saves $879 a year!
Lauren Smith
Answered on Nov 18, 2021
Lauren has written for World Nomads, the Matador Network, Korvia Consulting, and once upon a time Three Fates Games. She graduated from Columbia College of Chicago with a BFA in Creative Writing. After graduating, she moved overseas and lived in South Korea where she spent her free time traveling and going on road trips with friends. She misses the rest stop potatoes and is trying to figure out how to recreate them at home. She's now based outside of Chicago and when she's not writing she spends her free time reading, playing video games, and exploring whenever she can.
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