An auto loan is a type of financing used to purchase a vehicle, where the borrower receives a lump sum from a lender to buy the car and then repays that amount plus interest over a specified period. This loan is typically secured by the vehicle itself, meaning if the borrower fails to make payments, the lender has the right to repossess the car. Understanding auto loans involves knowing about interest rates, loan terms, and how they impact overall vehicle costs.
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