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How long should I wait before applying for a car loan?
I started my new job two months ago and I'm being paid a much higher salary. I'm wondering how long I should wait before applying for a loan.
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
That depends. The income of an individual doesn’t usually play a direct role in the interest rate given by a lender. The borrower’s credit and debt-to-income ratio are far more important. That said, a higher income could allow you to shorten the length of the term of the loan. While this would equate to higher payments, it would also lessen the amount of interest you pay over the life of the loan. A higher salary can also give you more money for a down payment, which can lower both your loan payments and the amount of interest paid.
Another consideration is whether the Federal Reserve is planning on raising or lowering interest rates in the near future. Sometimes, waiting too long can result in higher interest rates and vice versa. So keep your eye on the financial news if you’re planning on waiting. Otherwise, you might miss out.
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