What should I know about car loans?

My husband and I are thinking of taking out a loan to purchase a new car. Before we do, what are some important things I should know about car loans?

Answer
Great question! Before applying for a car loan, it’s important to understand the key terms associated with car loans to prepare you and your husband for what to expect during the process.
Down payment: The down payment is the amount of money you pay out of pocket before your loan covers the remaining cost to purchase a vehicle. The greater your down payment is, the smaller your loan value will be.
Interest rate: The interest rate is a percentage the lender will charge you for the money you borrowed. This rate is determined by:
  • Your credit score
  • Your credit history
  • The loan term
  • Your vehicle
Loan term: This is the duration or length of time it will take for you to pay off the loan. Loan terms are fixed, often between 24 and 84 months. Many people opt for 72-month term to lower their monthly payments. However, the term a lender offers will vary, often depending on your credit score and the amount you’d like to finance.
Beyond knowing these terms, be sure to ask any questions about your loan’s terms and conditions before signing. Once you’ve finalized your loan, there’s no going back!
Once you finalize a loan, remember you will need car insurance to cover the vehicle. If you want to save money, the Jerry app is a good place to start. A licensed broker that offers end-to-end support, Jerry gathers affordable quotes to help find you the best coverage for your new car!
Phoebe Mah
Answered on Nov 22, 2021
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