An auto loan is a type of financing that allows an individual to purchase a vehicle by borrowing money from a financial institution, such as a bank or credit union. The lender provides the funds needed to buy the car, and the borrower repays the loan over time with interest. Auto loans can be used to finance new or used vehicles, and they typically offer flexible terms, including repayment periods of up to 84 months. Before approving an auto loan, lenders consider factors such as the applicant's credit score, income, debt-to-income ratio, and employment history. Auto loans are a common way for people to purchase vehicles without having to pay the full price upfront.