on your car until the loan is paid off. These loans typically have lower interest rates because they aren’t too risky for lenders. But they put you at risk of repossession if you can’t make payments on time.
Unsecured Car Loans: These types of loans won’t use your car as collateral, so you won’t be at risk of repossession. However, unsecured loans are also riskier for lenders, so you’ll have to pay a higher interest rate.
Simple Interest: For these types of loans, your interest is calculated based on the remaining balance on your principal. This means the amount you pay in interest will decrease as you pay off the loan. You’ll also be able to reduce the amount that you owe over time if you make extra payments on the principal.
Precomputed Interest: When a car loan has precomputed interest, the interest is calculated when you take out the loan and distributed evenly over your payments. This means you won’t reduce the principal as quickly as you would with a simple interest loan.
Remember, once you buy a new car, you may also need a new insurance policy. Luckily,
can help you find the best rate on the coverage you need in minutes.
Just download the app, answer a few questions, and Jerry will help you compare personalized quotes from over 50 top providers like Allstate and Progressive. When you find a plan you like, Jerry can even help you buy it.
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.