How a loan works Pensacola FL

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

Empire Truck Sales
(850) 478-0031
8807 Paul Starr Dr
Pensacola, FL
Henson Truck Sales
(850) 477-0044
8115 N Palafox St
Pensacola, FL
Hill-Kelly Dodge Jeep Inc
(850) 476-9078
Pensacola, FL
Nwf Auto Sales Inc
(850) 457-6029
707 N New Warrington Rd
Pensacola, FL
Vince Whibbs Saab
(850) 476-6002
5651 Pensacola Blvd
Pensacola, FL
Pete Moore Chevrolet
(850) 456-7000
103 N New Warrington Rd
Pensacola, FL
Kia Autosport
(850) 457-7772
6637 Pensacola Blvd
Pensacola, FL
Astro Lincoln Mercury Isuzu
(850) 478-8531
6350 Pensacola Blvd
Pensacola, FL
Premier Auto Sales
(850) 471-4466
130 Baird St
Pensacola, FL
Vince Whibbs Pontiac-Buick-GMC-Cadillac Inc
(850) 476-6002
Pensacola, FL

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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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