How a loan works Lockport 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

Canal Auto & Truck Sales Parts & Salvage
(815) 838-3098
2601 Old Canal Rd
Lockport, IL
Knauz Continental Autos
(847) 234-1700
409 Skokie Hwy
Lake Bluff, IL
Dave Gill Trucks
(309) 698-7162
3901 N Main St
East Peoria, IL
Linwood Chrysler Dodge Jeep GMC Pontiac Buick
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Ford Rent-A-Car System
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Kensington International
(847) 964-5651
500 Lake Cook Rd
Deerfield, IL
Lemond Chrysler Center
(618) 842-4995
412 E Main St
Fairfield, IL
Largo Automotive
(847) 960-7171
9100 Trinity Dr
Lake In the Hills, IL
Jose's Auto Sales
(815) 229-6813
1302 Sandy Hollow Rd
Rockford, IL
Dave's Auto Sales
(309) 582-2826
302 SW 9th Ave
Aledo, IL

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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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