The Automobile Loan Market: Policy Issues For US Congress – Analysis

By Karl E. Schneider

An automobile loan allows a consumer to finance the purchase of a new or used car. Auto loans are usually structured as closed-end installment loans in which a consumer pays an amount of money each month for a predetermined time period, frequently three to seven years. Lenders often require consumers to make down payments to obtain the loans. An auto loan is secured by the automobile, so if a consumer cannot repay the loan, the lender can repossess the car to recoup the loan's cost.