All About Automobile Loans
                     ALL ABOUT 
AUTOMOBILE LOANS
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INTRODUCTION
• A loan is taken for buying/purchasing a car/bike/ any 
vehicle known as an auto loan. 
• These loans are come up with installment features, 
hence structured as installment loans. 
• These loans are a type of loan that is secured. 
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Secured loan
• A secured loan means a person who is taking an auto 
loan has to use a car/bike/ any vehicle as collateral.
•  
• This is for giving security to the lender. 
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How it will work? 
• If a person is not able to pay the loan, a car/bike/ any 
vehicle which is put as collateral is seized and sold by 
the money-lender to get his money. 
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Repossession
• This is an important term in the auto loan. 
• When a person unable to pay 
the loan, the buy/purchased a 
car/bike/any vehicle is seized 
by the money-lender and he 
owns the vehicle until the 
loan is paid. 
• The borrower/buyer can use 
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the car/bike.
Facts
• Auto loans are secured loans. 
• Auto loans have fewer rates of interest. 
• Secured loans have little risk compared to unsecured 
loans. 
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Structure of auto loan
• Auto loans are installment loans, the borrower/buyer 
has to pay fixed no. of payments in installations. 
• It consists of two parts-
1. Principle
2. Interest
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Principle- An amount/money that is sanction as a 
loan, which is equal to the value of a car/bike/ any 
vehicle. 
• Ex. If you are a bike of 50000rs then the principle is 
equal to 50000rs.
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Interest- This is the rate the same as general loan 
interest. 
• In simple words, it is the cost of an auto loan. 
• This means how much extra money the borrower has 
to pay to the lender for taking a loan. 
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Where to get an Auto loan? 
• 1. Directly through a vendor- Choose the vehicle and 
then go to Bank, finance companies for an auto loan. 
• 2. Through a car/bike/ any vehicle dealership- Take 
loan directly through a car/bike/ any vehicle dealers 
while buying the vehicle. 
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