What do I need to know about car loans?

I'm thinking about buying a car, but I've never had a loan before. What do I need to know about car loans before I apply?

Answer
A car loan may seem intimidating if you’re a first-time buyer. We’ve got you covered with a basic overview.
You take out a car loan to get money to purchase a car. You’ll pay the amount of the loan back to the lender over time plus interest, so the lender can make a profit.
In a car loan, your car is used as collateral, meaning that if you default (fail to make payments), the lender gets to take possession of the car.
To get a car loan, you’ll need to show you have a decent credit score and steady income. The better these numbers are, the better interest rate you can land.
It’s best to shop around with multiple banks, online lenders, and credit unions to find the best rates. If your projected interest rates are in the double digits, try to hold off on the loan until your credit score improves.
Before you sign on to a loan, make sure you properly review your loan agreement and ask the lender any questions you might have.
Finally, you’ll be required to purchase full-coverage car insurance for the duration of your loan.
Since this is one of the most expensive car insurance policies, it’s best to shop around for quotes and make sure you’re not overpaying. Use Jerry to compare dozens of competitive quotes and find the right policy hassle-free.
Eric Schad
Answered on Nov 16, 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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