I'm completely dumb when it comes to this stuff so I need everything explained to me like I'm 5 here. The only thing I know is I'm paying a ridiculous interest rate of 6.75%. I don't even know what that % means. 6.75% of what? Shrug.

6.75% APR (annual percentage rate) is likely the nominal interest rate, which is kind of a made up number - it's not the actual interest rate which impacts how much you pay each month. Depending on what the compounding period of your loan is (likely daily, with n=365, or sometimes monthly, with n=12), that rate is actually a daily/monthly rate of 6.75%/n. That is,

A. If you have daily compounding, your effective (actual) interest rate is 0.02% per day.

B. If you have monthly compounding, your effective (actual) interest rate is 0.56% per month.

These rates are a charge by the bank on your loan principle (remainder of how much you owe), basically a charge on your use of the money. If your principle during one payment period (generally monthly) is $1000, you would pay:

A. $1000 * 0.02% = $1000 * 0.0002 = $0.18 per day in interest = $5.55 per 30 day month in interest = $67.50 per 365 day year in interest

B. $1000 * 0.56% = $1000 * 0.0056 = $5.63 per month in interest = $67.50 per year in interest

Generally banks will use daily compounding for loans, as it generates slightly more interest in the end than monthly compounding due to leap years and gives a more uniform return, as monthly compounding gives the same "interest charge" for a 28 day month as a 31 day month.

Every month your payment goes partially towards paying off the principle of your loan and partially towards whatever interest charge was calculated for that month. The principle portion of the payment reduces your principle, which reduces the interest you will owe the next month. This in turn means the next month you will pay slightly more on your principle and slightly less in interest, and that cycle will continue until you pay off the loan.