What kind of car loan can I get?

I’m looking at financing a vehicle, but I’ve never done it before. I’m aware that there are numerous types of car loans, but I need to do more research to decide which is best for me. What different kinds of car loans can I get?

Answer
What kind of car loan you get can make a huge difference in how much interest you pay, the amount you’re approved for, and so on. You have about a half-dozen options for car loans, so choose wisely.
If you have great credit and a good income, a traditional car loan is ideal. But you still have other options to purchase a vehicle:
  • Personal loan. With a personal loan, you don’t have to use your car as collateral. However, you won’t get approved for as much and your interest rate will be higher.
  • Title loan. A title loan doesn’t allow you to purchase a car, but it is a type of loan that lets you borrow against the equity you have in your car. Watch out though. Interest rates can be as high as 300% annually.
  • Buy-here pay-here loans. These loans are for those with poor credit. Typically, these are in-house financing options offered by independent or used car dealerships. Again, interest rates can get high, so be careful.
  • Simple interest car loan. This is a traditional car loan that you would get from a bank, dealer, or credit union. At the beginning of the loan, you pay more toward the interest than the principal, but the amount that goes towards interest diminishes each subsequent month.
  • Precomputed car loan. This loan is similar to a traditional car loan. However, the monthly payment is the same toward your interest and principal each month. As a result, you have no advantage by paying the loan off early.
Regardless of which kind of car loan you choose, don’t overpay on insurance. Instead, use the Jerry app for additional savings you can use to pay off your car loan early!
As a licensed broker, Jerry helps you find and compare quotes from over 50 top providers in minutes. When you find a better rate, Jerry can help you buy your new coverage and even cancel your old policy!
Eric Schad
Answered on Dec 14, 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.
thumb-up

Did this answer help you?

Ask us a question by email and we will respond within a few days.
thumb-up

Have a different question?

You can meet us at our office and discuss the details of your question.
Let Jerry’s experts help you find savings on your car insurance!
No long forms or spam · Get quotes from 40+ carriers
Find insurance savings (100% Free)
rating primary
4.7/5 Rating on App Store

Easiest way to compare and buy car insurance

√
No long forms
√
No spam or unwanted phone calls
√
Quotes from top insurance companies
Find insurance savings — it's 100% free