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Stoney Creek Car Loans for Beginners

Stoney Creek Car Loans for Beginners

Are you new to the world of auto finance? Planning for your first auto loan? Our Stoney Creek car loans team work with new borrowers all the time and have put together a quick primer on the important aspects of auto finance to help newcomers better understand what they’re getting into.

 

We took three key points from that primer and thought they might make a good blog post.

 

What are the main types of Stoney Creek Car Loans?

 

There are two main types of auto loan but one primary loan type we use. They are simple interest loans and auto title loans.

 

Simple interest loans - Simple interest loans are what we spend most of our time working with. You borrow a set amount, the principal and interest is charged at an agreed rate for an agreed term.

 

Bad credit car loans, refinanced auto loans, cosigner auto loans and most loan types use simple interest.

 

Auto title loans - Auto title loans are something completely different. This is where you use your car as collateral to borrow money. Think of it as using your car as security for a short term loan.

 

You have to have paid off your car to use an auto title loan and we don’t see many of them but they are a thing.

 

How is interest calculated on an auto loan?

 

Interest is usually a set percentage agreed at the time of signing. It is calculated daily and front loaded so you pay more interest at the beginning of the loan before it evens out.

 

Interest is the lender’s fee for loaning you the money. The higher your credit score, the lower the interest rate. The more you borrow, usually the lower the interest rate.

 

Why does my credit score influence the interest rate?

 

Your credit score is a measure of how you manage debt. The better you manage it, the higher the score. This is how lenders can assess your creditworthiness without even having met you.

 

Every time you use a credit card, pay a utility bill or move home, it can be recorded in your credit report. This and lots of other pieces of information is collected and collated to make up your credit score.

 

If you’re good with debt, the chances are good that you’ll pay off the loan. This presents less of a risk to the lender, so they can afford to charge lower interest.

 

How long does it take to pay off a Stoney Creek auto loan?

 

Most auto loans are fixed term loans. You borrow a set amount over a set time at a set interest rate. That term is usually between 3-5 years but can be as long as 7 years.

 

The loan term will form part of the contract so it’s important that you understand how long it will be. It will usually be expressed in months rather than years, 48 months for 4 years, 60 months for 5 years and so on.

 

When you’re ready for a car loan, get in touch with the Stoney Creek auto loan experts at Northway Ford for great deals on auto finance.

 

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Categories: Car Loan

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