What is an Auto Loan?

An auto loan is a type of secured loan used to purchase a vehicle. The vehicle itself serves as collateral, which means that if the borrower defaults, the lender can repossess the car. Auto loans typically have lower interest rates compared to unsecured loans.

Key Features of Auto Loans

• Loan Amount: The amount borrowed usually depends on the vehicle's price and the borrower's creditworthiness.
• Loan Term: Auto loans can range from 36 to 72 months, affecting monthly payments and total interest paid.

It's crucial to shop around for the best rates and terms when considering an auto loan.