How a loan works Rochester 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

Mercedes Benz of Rochester Hills
(248) 601-5050
595 Utah Rochester
Rochester, MI
Lincoln Truck & Suv Sales
(989) 736-7600
100 W Main St
Lincoln, MI
Betten Tony & Sons Ford
(616) 363-6841
3839 Plainfield Ave NE
Grand Rapids, MI
Saturn of Grand Rapids
(616) 949-6555
2720 28th St SE
Grand Rapids, MI
Mercedes-Benz of St Clair Shores
(586) 773-2369
20200 E 9 Mile Rd
Saint Clair Shores, MI
Lynch Mike Ford-Mercury Sales & Service
(989) 734-2311
135 N Bradley Hwy
Rogers City, MI
Briarwood Ford Inc
(734) 429-5478
1371 Industrial Dr
Saline, MI
Heritage Automall Inc
(989) 773-6343
4650 E Pickard St
Mount Pleasant, MI
Thelen Mazda Volkswagen
(989) 684-2980
1112 N Euclid Ave
Bay City, MI
Prestige Pontiac-Buick-GMC Inc
(734) 483-0322
444 James L Hart Pkwy
Ypsilanti, 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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