New Horizon Title Loans is a business specializing in finding the best auto loan near you!

How do car loans work?

An auto loan, in a nutshell, is about the same as any other loan.  It is a monthly, two-part payment:  a principle payment, and an interest payment. The principle payment is an agreed-upon amount to pay back to the lender each month, and the interest is a smaller amount of money, which serves as a fee for borrowing the money.

 

What affects the interest rate?

Your credit score plays a large role.  This tells the lender of the degree of risk they are taking by lending you money.

The loan term is also a factor, as shorter terms offer lower interest rates, because the lender will get their money back faster.  Though it should be noted:  a short term will likely result in higher monthly payments.

By putting a larger amount of money down, you show your readiness and ability to pay back the money, which usually causes a lower interest rate.