 TITLE: How to Get Out of a Car Loan You Can’t Afford CONTENT: How Do Car Loans Work?\n----------------------\nA car loan is a secured installment loan you can use to purchase a vehicle. The car itself is used as collateral to secure the loan, which means the lender can repossess the vehicle to recoup the loan amount if you stop making your payments.\nBecause car loans are installment loans, the borrower makes equal monthly installment payments until the loan is paid in full. Car loan repayment terms can range anywhere from 12 to 84 months, though the average length is roughly 72 months for new cars and 65 months for used ones.\nA car loan's interest rate, which is based on your credit score, income and other factors, applies for the entire life of the loan. When you borrow to buy a car, the lender calculates how much you have to pay in principal and interest each month to reach a zero balance at the end of your repayment schedule. A lower interest rate can help reduce how much you'll have to pay.\nYou can get a car loan from a number of places. Banks, credit unions and vehicle manufacturers are the most common sources of car loans. You may even be able to secure financing directly from the dealership (\"buy here, pay here\"), but that's not usually a great option. In some cases, you can apply for a loan directly from a lender, and in others, your lender may arrange financing on your behalf. END