PriceProtect™
DriveShield™
GarageGuard™
Services
Insurance
Car Insurance
Compare Car Insurance with Jerry
Jerry’s Expert Advice
Car Insurance Estimates
Home & Renters Insurance
Renters Insurance
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
Why would I need a car loan?
I'm only 15, but I'm already thinking ahead to buying my first car. Why would I ever be in need of a loan?
Jim Donaher · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
At the risk of stating the obvious, cars are expensive! At the time of this writing, the average price of a new car is over $37,000. Even one of the least expensive new cars, the Chevrolet Sonic, costs over $16,000. Used cars can be much cheaper, but some are priced similarly to new cars. Since most of us don’t have that kind of cash lying around the house, if you need a car, chances are you will need a loan to buy it.
The good news is that car loans are widely available and can be made even if your credit isn’t great. Car loans are “secured” by the car you buy. This provides some comfort for the lender so that if you fail to make your payments, they can repossess your car and sell it to get their money back.
Lenders make their money by charging interest on loans. The price they charge (the interest rate) is a function of the risk presented by the borrower. A borrower with good or excellent credit is a lower risk and would likely be offered a lower interest rate. A borrower with poor or no credit is a higher risk. If they are offered a loan at all, the interest rate will be higher.
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
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