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How a loan works Alabama

When you purchase a vehicle with a loan, a bank or other financial institution pays for most or all of the vehicle up-front, and you agree to pay back the money over time.

Local Companies

Lexus of Mobile
(251) 478-3300
3062 Government Blvd
Mobile, AL
Susan Schein Chevrolet
(205) 664-2585
3311 Pelham Pkwy
Pelham, AL
Jerry Damson Nissan
(256) 740-5100
248 Cox Creek Pkwy
Florence, AL
Volvo Trucks of Mobile
(251) 478-3900
1600 Dauphin Island Pkwy
Mobile, AL
Air Base Auto Sales Inc
(334) 265-1546
311 Air Base Blvd
Montgomery, AL
Greenville Chevrolet Dodge Chrysler & Jeep
(334) 382-5500
169 Interstate Dr
Greenville, AL
V & T Used Auto Sales
(251) 457-7035
4523 Saint Stephens Rd
Eight Mile, AL
Bethlehem Auto Sales Inc
(205) 824-4311
1133 Ashbury Sq
Birmingham, AL
Carl Cannon Chevrolet-Cadillac Inc
(205) 384-5561
2801 Highway 78 W
Jasper, AL
Carpenter John Ford Inc
(256) 974-1186
14591 Court St
Moulton, AL

provided by:
2007 Volvo XC70
(Continue to more photos from MyRide.com)


 



Understanding Loans



When you purchase a vehicle with a loan, a bank or other financial institution pays for most or all of the vehicle up-front, and you agree to pay back the money over time. The amount of money you borrow from the bank is referred to as the "principal." The amount of money you contribute up-front is referred to as the "down payment" and usually varies from 10% to 20% of the purchase price of the vehicle. You can often purchase a new car without a down payment (if you qualify); used vehicles generally require a 20% or more down payment.



The payback period for a loan is typically up to five years, although some newer vehicles are being sold with longer-term loans. The financial institution will charge you "interest" for your use of their money. Interest rates vary depending on a number of factors such as your credit rating and where you live. Currently, new car loan rates start at around 8.5%, with used car rates about a percentage point higher. Manufacturers frequently offer lower loan rates as a purchasing incentive, but sometimes these are attached to conditions that may not work for you. Make sure you ask enough questions to make yourself comfortable when investigating various loan options.



 




Key features of loans




The primary features of loans are summarized below. Make sure you review our articles on leases and the differences between loans and leases before making a final decision.



 




  • You have ownership and equity in the vehicle. Your monthly payments are working to purchase that car and it's yours to sell or keep as long as you wish.



  • Gives you control over your vehicle.
Read more about How a loan works

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