A car loan is a type of financing specifically designed for purchasing a vehicle. It enables individuals to acquire a car by borrowing money from a financial institution, such as a bank, credit union, or dealership, and then repaying the loan over a predetermined period. Car loans can be either secured or unsecured. Secured loans require the vehicle itself to serve as collateral, meaning the lender can repossess the car if the borrower fails to make payments. Unsecured loans, on the other hand, do not require collateral but often come with higher interest rates due to the increased risk to the lender. The terms of a car loan typically include the loan amount, interest rate, repayment period, and any additional fees. The loan amount depends on factors such as the vehicle’s purchase price, the borrower’s creditworthiness, and the down payment provided. Interest rates can be fixed or variable, with fixed rates remaining constant throughout the loan term and variable rates fluctuating based on market conditions.