You are going to buy a car. As you can't qualify for a good rate yet, your parents will take out the loan and you need to pay them back for the total of the car plus all interest at the end of the 5 years. You will find that if you buy a new car, your parents can get a 3.9% interest rate on the loan. If you buy a used car, your parents can get 11.9% interest on the loan.