Are you ready to buy your next car, but not sure how car loans work? The finance team at Bill Walsh is always here to help and answer your questions, and we hope that this guide will start to fill in some of the blanks you may have in the world of car loans.

Different Types of Loans

When you're looking for a car loan, you may hear about different types. Today, the most common type of car loans is the simple interest loan. The simple interest loan is where the interest rate of the loan is based on the current balance of the loan. Thus, as a buyer pays off the loan, the interest rate will decrease.

Another type is the pre-computed loan, which is a somewhat outdated option. In this case the interest rate and payments are all pre-calculated so that there's no option to pay more each month, no flexibility with the interest rate, and no way to pay the loan off early. 

How Interest Works

Compared to some other types of interest, car loan interest is relatively simple. In most cases (as with a simple interest loan) it's based on the outstanding balance; you only pay interest on the total amount you owe.

What About Credit Score?

Credit scores are important when securing a car loan because they will affect the type of loan a lender will give to you. Lenders use credit scores to decide how likely a buyer is to pay off his or her loan. Generally speaking, the better your credit score, the better your chances will be in securing a low interest rate.

What if I Have A Bad Credit Score?

Even if your credit score is bad, you can still find a car loan. It just may mean that you'll end up paying more in interest. Two options are to shop around to look for the best loan in your situation, or wait until you have accrued a large down payment for your car purchase.

For more information on car loans, visit Bill Walsh; our finance experts are happy to help you navigate the car buying process.

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Bill Walsh Automotive Group

1752 E Norris Dr
Directions Ottawa, IL 61350

  • Sales: 815-315-1227
  • Service: 815-431-6181
  • Parts: 815-431-6181


  • Monday 8:30AM - 7:00PM
  • Tuesday 8:30AM - 7:00PM
  • Wednesday 8:30AM - 7:00PM
  • Thursday 8:30AM - 7:00PM
  • Friday 8:30AM - 7:00PM
  • Saturday 8:30AM - 5:00PM
  • Sunday Closed