A common form of financing a car is by way of a car loan. A car loan is similar to a personal loan except it is secured by the car you are financing. A car loan is generally financed between one and five years.

The longer the term the lower the repayments but more interest is accrued. If you take a car loan over a shorter period of time the repayments are higher but the amount of interest accrued is lower.

If you wish to pay your car loan out early you may incur penalty fees so it is wise to check with your car finance broker to see if early termination penalties apply to the car loan you are seeking out. If you default on your car loan the car you are using as security may be repossessed.