Auto Loan

An auto loan is a loan used to purchase a vehicle, with the vehicle serving as collateral. The borrower repays the loan in fixed installments over a set term.

Auto loans are secured, which often results in lower interest rates than unsecured loans. Missing payments can lead to repossession of the vehicle.

Related Terms

Secured Loan

A secured loan is backed by collateral such as a home or vehicle. If the borrower defaults, the lend...

Collateral

Collateral is an asset that a borrower pledges to a lender as security for a loan. If the borrower d...

Interest

Interest is the cost of borrowing money or the return earned on deposited funds, typically expressed...

Principal

Principal is the original amount of money borrowed in a loan or the original amount invested. It doe...

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