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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?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
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!View full answer
- Gregory R.
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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.
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