A car loan is a type of financing that allows individuals to borrow money to purchase a vehicle. The borrower agrees to repay the loan amount, plus interest, over a specified period, usually through monthly payments. The vehicle itself often serves as collateral, meaning the lender can repossess it if the borrower fails to make payments. Car loans can vary in terms of interest rates, loan duration, and down payment requirements. Factors such as the borrower's credit score and the lender's policies can influence these terms. Many people use car loans to make vehicle ownership more affordable and manageable.