How a loan works Martinsville VA

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 Honda
(276) 632-9741
2500 Greensboro Rd
Martinsville, VA
Nelson Dodge
(276) 632-9831
303 W Church St
Martinsville, VA
Figsboro Auto Sales
(276) 632-3666
RR 108
Martinsville, VA
Martinsville Toyota
(276) 638-2386
460 Commonwealth Blvd W
Martinsville, VA
Broadview Auto Sales
(276) 632-9775
1104 Memorial Blvd S
Martinsville, VA
Nelson Subaru
(276) 638-2487
521 Memorial Blvd S
Martinsville, VA
Walker's Auto Sales
(276) 632-8329
935 Hidden Valley Dr
Martinsville, VA
Wyatt Buick-Pontiac Inc
(434) 792-5711
2521 Riverside Dr
Danville, VA
Williams Honda
(757) 838-1252
3233 W Mercury Blvd
Hampton, VA
Honda Authorized Accessories & Parts
(703) 533-9700
6715 Arlington Blvd
Falls Church, VA

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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.

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