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How a loan works Maryland

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

Jefferson Leasing
800--532-7352
2127 Espey Ct
Crofton, MD

Fitzgerald Oldsmobile Cadillac Volkswagen
(301) 261-8246
34 Hudson St
Annapolis, MD

Benson Motor Cars
(410) 269-0413
324 Sixth St
Annapolis, MD

Diehl's Ford Sales Inc
(301) 746-8658
Friendsville, MD

Mack Trucks Inc
(301) 790-5650
Hagerstown, MD

Pohanka Automotive Group
(410) 546-1661
Salisbury, MD

Russell Buick Sales
(410) 744-2000
6616 Baltimore National P
Catonsville, MD

Harrington Auto Sales
(410) 783-7308
Baltimore, MD

Norris Acura West
(410) 461-7000
8559 Baltimore National P
Ellicott City, MD

Ken Dixon Honda
(301) 645-7000
2294 Crain Hwy
Waldorf, MD

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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

Jefferson Leasing

800--532-7352
2127 Espey Ct
Crofton, MD

Read more about How a loan works

- Lowering Auto Finance Costs Maryland

Save money on your auto loan when buying a used vehicle. Learn how to lower your vehicle price and get the best loan contract.

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- Lowering Auto Finance Costs Maryland

Save money on your auto loan when buying a used vehicle. Learn how to lower your vehicle price and get the best loan contract.

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Advertising	Family	Home Services	Real Estate Resources
Business Services	Fashion	Industrial Goods & Services	Retail & Consumer Services
Career	Financial Services	Insurance	Software
Cars	Food & Beverage	Internet	Technology
Computer Hardware	Franchise	Legal	Telecommunications
Construction	Health	Miscellaneous	Trade Shows
Education	Holidays	Nightlife	Travel
Entertainment	Home Appliances	Online Database	Weddings
Environmental	Home Electronics	Pets	World History