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How a loan works Virginia

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

Sadler Chevrolet Pontiac Cadillac Buick GMC Auto Center
(757) 569-9756
Franklin, VA
Mitsubishi-Stohlman of Tysons Corner
(703) 448-9300
8435 Leesburg Pike
Vienna, VA
Countryside Auto Sales
(804) 561-3349
11831 Patrick Henry Hwy
Amelia Court House, VA
Casey Auto Group
(757) 591-1300
777 J Clyde Morris Blvd
Newport News, VA
Reynolds Pontiac-Cadillac-GMC Truck-Buick-Subaru Inc
(540) 672-3312
13220 James Madison Hwy
Orange, VA
Integrity Auto Sales
(757) 858-8546
3439 Sewells Point Rd
Norfolk, VA
Rosenthal Volkswagen
(703) 278-8967
11050 Main St
Fairfax, VA
Dodge Pomoco
(757) 369-3565
12629 Jefferson Ave
Newport News, VA
Priority Hyundai
(757) 877-9995
12872 Jefferson Ave
Newport News, VA
Kernstown Auto Sales
(540) 662-9579
3283 Valley Pike
Winchester, VA

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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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