What is a loan for a car?

What is a car loan? I heard if I do not have enough funds to pay for a vehicle, I can use a loan. I’m not sure how a car loan works.

Answer
Don’t worry! Understanding different vehicle-related terms can be confusing, especially when they’re related to finance. Luckily, you have come to the right place!
A car loan is a method of financing or paying for a vehicle. A lender gives a borrower money, or a loan, to pay for the car. Since new cars can cost $25,000 or more, a loan allows a person to get a car without paying for it upfront in cash.
In exchange, the person must repay the loan amount through monthly payments. A borrower also doesn’t own the vehicle until repayment is complete. If a borrower fails to repay the amount, the lender can repossess or take back the vehicle.
Loan contracts and agreements vary between lenders, so you’ll want to shop around before deciding to get a car loan. You’ll want to be sure you can afford the monthly payments and are happy with your interest rate.
Keep in mind, if you get a car loan, you’ll likely have to carry full coverage car insurance on your new car. To save money and find the best rate, use the Jerry app. Jerry gathers personalized quotes from top insurance companies to find you the best rate and coverage. The average user saves $879 a month!
Phoebe Mah
Answered on Nov 22, 2021
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