How a loan works Arkansas

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

David's Auto Sales
(870) 864-9300
2403 Haynesville Hwy
El Dorado, AR
67 Truck & Trailer Sales
(501) 940-8061
5701 W Main St
Newport, AR
Keathley Enterprises Auto Sales
(501) 513-0996
1617 E Oak St
Conway, AR
J & R Sales & Truck Service
(870) 483-7345
824 Highway 463 S
Trumann, AR
Riverside Auto Sales
(870) 269-6888
901 Main St # A
Mountain View, AR
Breeden Dodge Inc
(479) 646-4731
5900 Highway 71 S
Fort Smith, AR
Kawasaki
(479) 968-4566
Highway 64 E
Russellville, AR
Mark Smith Discount Auto Inc
(479) 648-9500
4310 Towson Ave
Fort Smith, AR
Southern Hauler Trucks
(870) 856-2786
Highway 62 & 412
Hardy, AR
Crain Automotive Team
(501) 542-5575
Colonel Glenn Rd
Little Rock, AR

provided by:
2007 Volvo XC70
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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.
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