An official website of the United States Government
Auto loans

What is a retail installment sales contract or agreement? Is this a loan?

A retail installment sales contract agreement is slightly different from a loan. Both are ways for you to obtain a car by agreeing to make payments over time.

But a loan is a transaction between you and a bank or other lender for money, where you use the money to purchase a car and agree to repay the loan balance plus interest. A retail installment sale, on the other hand, is a transaction between you and the car dealer to purchase a car where you agree to pay the dealer for the car over time, paying both the value of the car plus interest.

TIP: With a retail installment sales contract, you may have additional options available to you (for example, the ability to stop making payments to the dealer) if there is a defect in your car.

Can't find your question? Ask us!

Submit a question