How a loan works Cordova TN

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

Roadshow Bmw Mini
(901) 365-2584
405 N Germantown Pkwy
Cordova, TN
Covington Pike Toyota
(901) 377-8000
2201 N Germantown Pkwy
Cordova, TN
United Auto Group
(901) 377-8000
2201 N Germantown Pkwy
Cordova, TN
Subaru
(865) 882-0113
1028 S Roane St
Harriman, TN
Bud Davis Lincoln Mercury
(901) 373-5700
2177 Covington Pike
Memphis, TN
Valley Auto Sales
(931) 761-6021
482 Fairview Cir
Sparta, TN
Dean Stallings Ford Inc
(865) 483-4352
480 S Illinois Ave
Oak Ridge, TN
Highway 10 Auto Sales
(615) 374-3663
2865 Highway 10
Hartsville, TN
Trickett Honda
(615) 868-1870
1823 Gallatin Park N
Nashville, TN
Seaton Dwain Ford-Mercury Inc
(731) 989-2121
1618 US Highway 45 N
Henderson, TN

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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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