How a loan works Mobile AL

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

Grady Automotive Group
(251) 476-2550
1414 W I65 Service Rd S
Mobile, AL
Blackwell Truck Sales and Parts
(251) 470-6335
3450 Georgia Pacific Ave
Mobile, AL
Southeast Fleet Sales Inc
(251) 304-0676
4104 Moffett Rd
Mobile, AL
Flora-Bama Flatbeds Inc
(251) 432-1422
888 Dekle St
Mobile, AL
Dub's Auto Sales
(251) 456-4115
3901 Saint Stephens Rd
Mobile, AL
Mark Dodge
(251) 478-5252
3118 Government Blvd
Mobile, AL
Downey-Wallace Auto Sales
(251) 665-4600
5348 Highway 90 W Ste A
Mobile, AL
Ward International Trucks Inc
(251) 433-5616
2101 Perimeter Rd
Mobile, AL
P Dq Auto Sales
(251) 342-1500
3926 Moffett
Mobile, AL
Greater Mobile Chrysler Plymouth Jeep
(251) 476-6860
3016 Government Blvd
Mobile, AL

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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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