Most auto loans are secured loans. In these, the car serves as collateral for the lender. If the borrower fails to make payments, the lender can repossess and resell the car. It is possible through a lien as a legal agreement. Here, the lender is listed as the lienholder for the car, which gives him the right of possession until the loan is repaid. In contrast, with unsecured loans, the lender relies on the borrower’s promise to repay the debt. They are less common and may carry higher interest rates.

Add Comment

Your email address will not be published. Required fields are marked *