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How a loan works Tennessee

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

Pye Acura
(423) 855-1093
2131 Chapman Rd
Chattanooga, TN
Bill Heard Chevrolet Corp Nashville Inc
(615) 731-3000
5333 Hickory Hollow Pkwy
Antioch, TN
Bill Gatton Mazda Bristol
(423) 989-6700
2128 Volunteer Pkwy
Bristol, TN
Volvo of Nashville
(615) 244-7000
302 Murfreesboro Rd
Nashville, TN
Chattanooga Wholesale Trucks
(423) 634-1172
3015 S Market St
Chattanooga, TN
Covington Pike Toyota
(901) 377-8000
2201 N Germantown Pkwy
Cordova, TN
Heitz Joe Toyota
(931) 645-1963
1650 Wilma Rudolph Blvd
Clarksville, TN
Bond's Auto Sales
(423) 663-3999
7386 Baker Hwy
Huntsville, TN
Gossett Hyundai South
(901) 333-9000
2660 Mount Moriah Rd
Memphis, TN
Lawson Mountain Mazda
(423) 636-1414
3100 E Andrew Johnson Hwy
Greeneville, TN

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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.
Read more about How a loan works

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