How a loan works Chicago IL

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

Grossinger City Toyota
(312) 707-9500
1233 N Wells St
Chicago, IL
Mizera Chevy Buick
(773) 353-1890
5333 W Irving Park Rd
Chicago, IL
Levin Ginsberg
(312) 368-0100
180 N La Salle St Ste 2210
Chicago, IL
Ray Buick Inc
(773) 767-8530
5011 W 63rd St
Chicago, IL
Max Allen Auto Sales
(773) 772-9512
3400 W Armitage Ave
Chicago, IL
Perillo Motors
(312) 269-1111
1035 N Clark St
Chicago, IL
Archer Auto Sales Inc
(773) 247-6800
4411 S Archer Ave
Chicago, IL
Frank Lynn Associates
(312) 263-7888
150 S Wacker Dr Fl 17
Chicago, IL
Kam's Auto Sales Inc
(773) 977-0400
Chicago, IL
City Intl Trucks Inc
(708) 496-7525
4655 S Central Ave
Chicago, IL

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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.
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