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How a loan works Massachusetts

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

Colonial Honda
508-996-6800
26 State Rd
Dartmouth, MA
Boston Autoport
(617) 242-2300
100 Terminal Street
Charlestown, MA
Wareham Ford Inc
(508) 295-3643
RR 28
Wareham, MA
Smith Motor Sales of Haverhill Inc
(978) 372-2552
420 River St
Haverhill, MA
Foreign Motors West
(508) 401-2700
533 Boston Post Rd
Wayland, MA
American Sewing Mach Co
(781) 935-3955
53 Park St
Arlington, MA
South Shore Imported Cars Inc
(781) 826-2200
579 Washington St
Hanover, MA
Bezema Buick GMC Truck Corp
(781) 769-2440
401 Boston Providence Tp
Norwood, MA
Balise Honda
(413) 788-4097
1371 Riverdale St
West Springfield, MA
Patterson-Chevrolet Buick
(978) 297-3241
664 Spring St
Winchendon, MA

provided by:
2007 Volvo XC70
(Continue to more photos from MyRide.com)


 



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

Colonial Honda

508-996-6800
26 State Rd
Dartmouth, MA
Read more about How a loan works

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