How a loan works Pontiac MI

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

Douglas Jim Auto Sales
(248) 332-8351
1153 Baldwin Ave
Pontiac, MI
Auburn Pontiac GMC
(248) 332-9300
500 Updyke
Pontiac, MI
Affordable Auto Sales of Michigan Inc
(248) 758-2600
245 S South Blvd
Pontiac, MI
Looking New Auto Sales
(248) 334-5539
1390 Baldwin Ave
Pontiac, MI
Delinske Motor Group
(248) 454-0401
759 Owego Dr
Pontiac, MI
Giovanni Motors Inc
(248) 454-0711
1491 Baldwin Ave
Pontiac, MI
Woodward Motor Mall
(248) 332-9700
45751 Woodward Ave
Pontiac, MI
Grand Auto Sales
(313) 541-1400
21101 W 8 Mile Rd
Detroit, MI
Jim Waldron Pontiac Buick GMC Trucks Inc
(810) 653-1000
1146 S State Rd
Davison, MI
South Kent Sales
(616) 877-4435
4518 Division St
Wayland, MI

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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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