Buying a new Honda is complicated enough without throwing in auto loan terminology. Auto loans may seem difficult to understand, especially with long contracts. Once you break it down, however, auto loans can be the simplest part of buying a new car.
What is an Auto Loan?
An auto loan is money borrowed to purchase a new or used vehicle. Normally, auto loans are repaid in monthly installments. If a borrower fails to repay the loan, the lender can repossess the car, truck, or SUV the borrower purchased.
How Does an Auto Loan Work?
Like most loans, an auto loan is comprised of two parts. The principal is the initial amount of money lent to the borrower. It’s largely determined by the purchase price of the vehicle minus the buyer’s down payment. Some dealerships don’t require down payments. Foregoing a down payment can result in higher monthly payments. Larger down payments help reduce the monthly payment.
The second part of an auto loan is the interest. The interest is what the lender charges for using their money to purchase a vehicle. It’s normally expressed as a percentage rate which comes out to a percentage of the principal. Some loan contracts require the interest be paid off in full before the principal is repaid entirely.
Special Finance Options
Honda of Tiffany Springs is proud to offer our customers with some of the best deals in the automotive industry. Check out our special finance options page to see what deals we’re currently running!
Our special finance offerings are available on popular models, like the Honda Civic, Accord, and Pilot. This page is updated frequently with new leases, lower interest rates, discounts, and much more. Getting the best deal on a car doesn’t have to be difficult. Sometimes it as easy as checking out a webpage!