How a loan works Hendersonville 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

L & W Auto Sales
(615) 822-5010
118 Old Shackle Island R
Hendersonville, TN
L & W Auto Sales
(615) 822-7206
118 Old Shackle Island R
Hendersonville, TN
Autowise Car Sales
(615) 822-9473
379 E Main St
Hendersonville, TN
Thrify Auto Sales
(615) 264-4611
121 Commerce Dr
Hendersonville, TN
Enterprise Car Sales
(615) 824-8191
1169 W Main St
Hendersonville, TN
Long of Chattanooga
(423) 855-3726
6039 International Dr
Chattanooga, TN
Rusty Wallace Toyota
(423) 587-1972
5944 W Andrew Johnson Hwy
Morristown, TN
Pedro's Auto Sales Inc II
(615) 731-0111
3215 Nolensville Pike
Nashville, TN
Giles County Rent-A-Car
(931) 363-3555
1500 W College St
Pulaski, TN
Auto Keen
(423) 543-5225
405 Cherokee Park Dr
Elizabethton, 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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