Loan Contract Terms

If you have decided to finance your next vehicle purchase we recommend that you take certain steps and do a little homework before going to the dealership. All the important information you will need can be spelled out for you with very little effort.

This information will allow you to set your finance limit, desired payment and see the many different options you have.

You can count on Banks and Credit Unions competing for your business. Shop around a little and you will be amazed on how aggressive financial institutions will become. This will mean significant savings in the form of lower interest rates and possible incentives for automatic payment withdrawal programs.

The formula is actually very simple.

FIRST STEP---Set a specific amount of your intended purchase.

Let's say your set your limit at $20,000. Remember this amount should include your tax and other items such as Doc fee's and licensing. So, in real numbers the following is an example of total amounts to consider.

Typical structure for $20,000 loan

Negotiated sale price $18,000.00

tax based on sale price x 8.6% varies $1,548.00

License Fees approximate $250.00

Doc Fees varies from State to State $150.00

Total amount to finance $19,948.00

Read on for more about Loan Contract Terms

SECOND STEP---Understand that the Loan amount will always calculate only one way. This means that whoever calculates your payment, should always come up with the same amount.


Amount to Finance (X)times the term (X)times the annual percentage rate (interest rate)(=) equals the payment. ONCE AGAIN the payments will never be different unless the amount to finance is different in comparison


The possibility of additional items being included in the amount to finance can increase the payment calculations.

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