How a loan works Fergus Falls MN

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

Nelson Ford Lincoln-Mercury Inc
(218) 739-4401
712 Frontier Dr
Fergus Falls, MN
Nelson Ford-Lincoln-Mercury Inc
(218) 739-4401
Fergus Falls, MN
Lee Allen Auto Sales Inc
(763) 479-1881
Maple Plain, MN
Invision Auto Sales
(507) 285-1157
4720 Highway 52 N
Rochester, MN
Wholesale Direct Llc
(763) 434-5675
16019 Central Ave NE
Ham Lake, MN
Suburban Chrysler Inc
(651) 735-8400
1891 Suburban Ave
Saint Paul, MN
Burnsville Volkswagen
(952) 894-3500
12020 I-Hwy 35 W
Burnsville, MN
Braham Ford Motor Inc
(763) 444-9194
216 S Main St
Braham, MN
Chrysler Corporation
(763) 553-2565
Minneapolis, MN
Ellingson Motors
(507) 725-3963
205 N Kingston St
Caledonia, MN

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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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