What Is an Auto Loan?
An auto loan is a secured loan used to buy a vehicle, with the vehicle itself serving as collateral. The borrower repays it in fixed monthly installments over a term that commonly ranges from 36 to 84 months. The total cost depends on the price, down payment, interest rate, term, taxes, and fees.
How the Term Affects Cost
A longer term lowers the monthly payment but increases total interest and raises the chance of owing more than the car is worth for part of the loan.
Dealer vs. Direct Financing
Loans can come directly from a bank or credit union, or be arranged through a dealer; the APR allows offers to be compared on the same basis.
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Put Auto Loan into practice with these free calculators — no sign-up, nothing stored.
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Auto Loan Calculator
Estimate your monthly car payment and total interest for new or used vehicles.
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Car Affordability Calculator
Find the car price that fits your budget without financial strain.
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Loan Calculator (EMI)
Works for any loan type — find your monthly payment and total interest.
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🔗 Related Terms
More Loans & Credit Terms
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.