How a loan works Lexington KY

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

Glenn Buick GMC Trucks Hyundai
(859) 263-8527
3340 Richmond Rd
Lexington, KY
Freedom Dodge Chrysler Jeep
(859) 268-3000
1560 E New Circle Rd
Lexington, KY
Green's Toyota of Lexington
(859) 254-8677
630 E New Circle Rd
Lexington, KY
Man-O-War Ford
(859) 272-2626
3695 Nicholasville Rd
Lexington, KY
Mazda-Paul Miller Ford Isuzu
(859) 244-4276
Lexington, KY
Kenworth Trucks
(859) 281-5152
945 Nandino Blvd
Lexington, KY
Ford Paul Miller-Mazda-Isuzu
(859) 253-2337
Lexington, KY
Don Jacobs
(859) 276-3546
Lexington, KY
Man-O-War Ford
(859) 271-4440
156 W Tiverton Way
Lexington, KY
Ford Paul Miller-Mazda-Isuzu
(859) 244-4292
Lexington, KY

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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

Automobile Consumer Services Inc.

(513) 527-7700
6249 Stewart Road
Cincinnati, OH


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