How a loan works Richmond VA

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

Drivetime Car Sales
(804) 321-1130
3517 Mechanicsville Pike
Richmond, VA
McGuinn Auto Sales
(804) 321-4931
Richmond, VA
Hyundai-West Broad
(804) 755-7777
7100 W Broad St
Richmond, VA
Mooers Volvo Broad St
(804) 755-6666
7211 W Broad St
Richmond, VA
Short Pump Auto Sales
(804) 360-8405
12632 Broad Street Rd
Richmond, VA
Victory Kia
(804) 237-8019
8903 W Broad St
Richmond, VA
Pearson Mitsubishi
(804) 323-0300
9601 Midlothian Tpke
Richmond, VA
McGeorge Mercedes-Benz
(804) 755-9393
8225 W Broad St
Richmond, VA
Razaq Auto Sales & Service
(804) 233-3411
3300 Jefferson Davis Hwy
Richmond, VA
McGeorge Toyota
(804) 755-9200
9319 W Broad St
Richmond, VA

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2007 Volvo XC70
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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

Mercedes and Volvo Motor Cars, Inc

(202) 265-7235
1525 15th St., NW
Washington, DC


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