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A car loan makes car ownership possible when you don’t have the cash available. Borrowers can use car loans for new or used vehicles. Car loans are available from credit unions, banks, and car manufacturers. Borrowers pay back the car loan over a set period of time, typically with interest included, as well.
A lender reviews a borrower’s credit history to determine if they qualify for a loan. Because car loans are secured by collateral, they are generally easier to obtain. If a borrower fails to make payments, the lender can repossess the car in order to recoup the losses.