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.