How Do Car Loans Work? | New Roads Auto Loans

If you're looking to purchase a car using an auto loan, here is some information that can help you navigate through the paperwork.

What Is Car/Auto Financing?

When you finance a vehicle, the financial institution you are affiliated with lends you money as an installment loan. The automobile lenders earn income through charging you interest on the auto loan and for any processing fees associated with the loan. The vehicle itself acts as a kind of collateral for the finance company, giving them the authority to repossess the car if payments are not made in a timely manner.

How Do Car/Auto Loans Work?

Financial institutions will lend to the consumer a secured auto loan. Secured loans are secure because they are backed by some form of collateral, such as a car. This means that if you fail to make your monthly payment for the loan term, the financial institution can repossess the car and sell it.

How Can I Save Money on an Auto Loan?

Saving on auto loans can get more complicated than you might think. Opting to make lower monthly installments can seem like the best choice, but over time costs you more. Other factors influencing the loans you may get offered include your personal credit score. If you have a poor credit score, getting an excellent offer tends to be more difficult.

Fortunately, there are some simple steps you can take to help ensure you get the best auto loan possible. Choosing a lender like New Roads Auto Loans that specializes in bad credit auto loans with zero down payment requirements can help you save big as you're rebuilding your credit score.

How Can I Reduce Interest Charges on My Auto Loan?

Interest is the fee that you pay as a borrower for the loan. The lower the interest rate is, the less you end up paying as time goes on. Principal is the amount that you will have left once the interest on the loan is paid. You can reduce interest rates by paying on your loan for about 18 months. After 18 months and a good payment history you may look to refinance for a lower interest rate. You can also increase the frequency of payments which will over time lower the length of the loan, thus lowering the amount of interest you will pay.

In most cases, the longer the loan term is, the more interest you'll pay. Still, it is important to keep in mind that you can potentially pay less on a monthly basis for your car with a longer loan term length because the principle balance you borrowed is spread out over more months. If you ever want to refinance your car, it is crucial that you understand both interest rates and loan terms and how they affect one another.

How Do Taxes Affect the Auto Loan Interest?

Once you have purchased a car, you get charged taxes based on the car's price. This means that the taxes you owe for the vehicle is added straight to the loan. The taxes you pay do not increase the interest rate for the loan. Sometimes, however, the taxes may increase the overall loan balance.

What Does APR Mean on an Auto Loan?

APR is the Annual Percentage Rate you have to pay for your loan or credit line each year. For auto loans, this accounts for interest charges as well as other fees. This rate will be higher than your interest rate (aka note rate) quoted on your loan paperwork.

How Do Car Loans Affect Car Insurance?

When you are paying for a financed car, most lenders will require you to have adequate coverage for car insurance. This car insurance will, on average, include comprehensive coverage and collision coverage. Check your own state's requirements, however, to make sure it properly covers you.

How Do Down Payments Affect Your Car Loan?

Down payments are the initial payment you make to pay off your vehicle. The larger the down payment you make, the less you will need to borrow. However, we understand that a down payment may not be feasible for individuals with bad credit or have filed for bankruptcy, so most of our auto loans do not require a down payment.

What Are Car Loan Terms?

This is the amount of time you will be paying back your loan, expressed in months. Typically, loan terms can be from three to seven years depending on the lender and your budget. While a long-term loan can save you money on your monthly payments, you will end up paying more in interest over the loan's lifespan, so go with shorter loan terms whenever possible.

How and When Do You Pay Car Loan Interest?

The best way to pay the car loan interest is by setting up direct payments with your bank or banks. This way, the money gets automatically debited from your account each month, ensuring that you never miss a payment. You can set the direct payments to leave your account bi-weekly or monthly.

APPROVALS

How do I get approved for a car loan?

Complete your car loan application online. One of our helpful representatives will contact you shortly after you submit the loan application to review the terms of your loan approval and the purchase process. We make it easy for you to apply for a car loan even with bad credit.

Besides sending in the loan application, what else do I need?

It's pretty simple. You need to be employed and must be able to provide proof of your income. We'll ask for your current pay stub. There may be other additional documents or conditions that need to be met, but these are minimal and are specific to each applicant.

Can I get approved for a car loan with bad or poor credit?

Yes. We specialize in auto financing for car buyers with credit problems. We know what it takes to fund poor credit, or bad credit or no credit car loans. We're backed by CPS, a national auto finance company that has been financing automobiles to people with real-world credit issues since 1991. We finance people with bankruptcy, prior repossession, charge-offs, late payments and/or tax liens. Basically, we are here to help you with bad credit auto financing. We have the experience. We know how to help.

PURCHASE PROCESS

How does the car purchase process work?

There are three easy steps:

Apply on line and get approved
Provide your proof of income (and other documents as needed) for us to verify
Work with a dealer to find the right car or truck that fits the terms of your approval

How much money do I need to put down for my car loan?

The great news is that New Roads does not require any down payment - ZERO DOWN PAYMENT!!
However, if the vehicle you select costs more than the loan amount you are approved for, the dealership may require a down payment.

CUSTOMER SERVICE

Can I talk to a representative before I apply for a car loan?

Sure. Just call 1-800-924-0364 and ask for a Customer Service Representative.

Our Customer Service Representatives will gladly answer all your questions.

What do current customers have to say about their experience working with New Roads Auto Loans?

I have rough credit, but I also need a car. NewRoads was able to help me out even with my bankruptcy and prior repossession. I was driving a new car within a few days of applying.

- Mr. Hinderstrom, Louisiana

I wasn't sure if the New Roads financing was for real. I was really pleased at how fast and easy it was to get financing at New Roads. I had my loan funded within 36 hours of completing my application.

- May Cantor, Arizona

New Roads referred me to a dealer in my area that was extremely helpful and able to provide me with a great deal on a good car. Thank you New Roads!

- John Dinens, California

My wife and I had hit hard times and our credit was pretty bad. I heard about New Roads from a friend of mine. I was a bit hesitant to apply, because I didn't want to get rejected. But to my surprise, New Roads gave us the second chance we needed. Now I'm back on the road and things are better.

- Tom Wentz, Michigan

When I applied through the site, I received an instant decision. I thought I was gonna get turned down, but New Roads approved me! And my New Roads rep was super friendly and helpful. It's nice to work with people that care about you and help you along the way. New Roads is the bomb!!

- Mary Minsters, Illinois

SECURITY & CONFIDENTIALITY

Is the application process secure and confidential?

Yes. New Roads is a totally secure site and all consumer information is closely guarded. We don't share your personal information with any third parties.

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