How a loan works California

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

Mercedes-Benz of Fresno
(559) 438-0300
7055 N Palm
Fresno, CA
Clawson Honda of Fresno
(559) 435-5000
6346 N. Blackstone Avenue
Fresno, CA
Executive Auto Sales and Detailing
(559) 222-9191
116 E San Jose Ave
Fresno, CA
Kitahara Pontiac Buick GMC
(559) 431-2020
5515 N Blackstone Ave
Fresno, CA
Lithia Automotive Group
(559) 435-3500
5580 N Blackstone Ave
Fresno, CA
Lithia Ford of Fresno
(559) 435-8400
195 E. Auto Center Dr
Fresno, CA
Weber BMW
(559) 447-6700
7171 N Palm Ave
Fresno, CA
Lithia Dodge of Fresno
(559) 431-4000
6162 N Blackstone Ave
Fresno, CA
Lost Campers
(415) 632-9773
2955 Third St.
San Francisco, CA
MILLER TOYOTA/SCION OF ANAHEIM
(714) 879-6300
1331 N. Euclid St
Anaheim, CA

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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.

Featured Local Company

Mercedes-Benz of Fresno

(559) 438-0300
7055 N Palm
Fresno, CA

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