PriceProtect™
DriveShield™
GarageGuard™
Services
Insurance
Car Insurance
Compare Car Insurance with Jerry
Jerry’s Expert Advice
Car Insurance Estimates
Home & Renters Insurance
Renters Insurance
Loans
Car Loan
Compare Car Loans with Jerry
Jerry's Expert Advice
Car Loan Guides
Repairs
Car Repair Estimates
Repair Estimates for Popular Services
Advice
Read Car Content
Browse Jerry Car Advice
Check Out Expert Car QnA
Learn About How We Create Content
Jerry Data & Research
What is a car loan and how does it work?
I want to buy a car, but I've never had a car loan before. In fact, I don't even know what it is. How do they work?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
If you’ve never taken out a
car loan
before, the process may seem intimidating. But don’t stress! It’s surprisingly simple if you know where to start.Generally speaking, a car loan is a financial instrument that allows you to borrow money from a lender to purchase a car. In return, you have to repay the borrowed amount plus interest and the lender keeps a
lien on your car
, which gives them legal rights to your vehicle if you don’t repay the loan.To get a car loan, follow these steps:
- Take a look at your credit report to find your score and settle any outstanding debt
- Shop around for the best rates with banks, online lenders, credit unions, dealerships
- Show proof of income, like W-2s or pay stubs
- Show verification of identity
This should allow you to apply for preapproval, whereby the lender tells you how much you’d have for a loan so you can budget the right vehicle.
From there, you’ll need to decide on a car, the length of loan you want, and how much you can give as a down payment. As a general rule, a 48-month loan and a 10% down payment are ideal.
One more thing: before you can drive the car home, you will have to show proof of full coverage car insurance.
Jerry
can help. Just complete a 45-second sign-up to compare dozens of competitive quotes from top insurers like GEICO, Allstate, and Nationwide. View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
Join 4M+ members in lowering their car insurance
You Might Also Be Interested
Read Advice From Car Experts At Jerry
What Others Are Asking
.jpg&w=64&q=75){kind=avatar}
Browse More Content
Insurance in Your State
Easiest way to compare and buy car insurance
No long forms
No spam or unwanted phone calls
Quotes from top insurance companies
