# Auto Loan

*Borrowing & Credit — Finicade finance glossary*

An auto loan is an installment loan secured by the car itself, so default means repossession rather than a court fight. The structural problem is that cars depreciate faster than loans amortise, especially on long 72- or 84-month terms: you can owe more than the car is worth for years, a position called negative equity that traps you when you want to sell. Longer terms lower the payment and raise both total interest and the time spent underwater.

**Also known as:** car loan, vehicle finance, car finance

**Related terms:** [Installment Loan](https://finicade.com/glossary/installment-loan), [Collateral](https://finicade.com/glossary/collateral), [Loan-to-Value Ratio (LTV)](https://finicade.com/glossary/loan-to-value-ratio), [Depreciation](https://finicade.com/glossary/depreciation), [Balloon Payment](https://finicade.com/glossary/balloon-payment)

Source: https://finicade.com/glossary/auto-loan