So what is a car loan? A car loan is usually a three- to five-year-term (or consequent to the useful life of the car) personal loan to purchase a car. You have the option on which to apply, whether secured loan or unsecured. If you already have a car, you may opt to go for a secured loan where you use your old car as collateral.

Once you stop paying for the loan, say for two months, they might get your old car and ask you to pay for the rest of the amount of the new car you acquired. Otherwise, you can go for an unsecured car loan. You would not need any collateral but you will have to pay higher interest. You also have the option whether to go for a direct car loan or an indirect one.

For the direct car loan , you have to go to a bank and they will give the loan directly to you. You would have to exert more effort here since you will have to take care of everything yourself, but I tell you, you will save a lot. Whereas for the indirect loan, a car dealership will do the task of lending money from the bank but of course you have to pay them, in the form of fees or high interest, for their service.

There are still two types of indirect car loans : one is personal purchase, the other is commercial. If you are self-employed or a businessman who needs more cars for your day to day transaction, you better get a commercial purchase car loan. You will be offered cars with lower rates since you are to purchase more.

Just a piece of advice: research and know everything about car loans and, of course, about purchasing a car. You could check which dealership offers the lowest interest loans. Compare the rates. You also have to have an idea of the terms in lending. You would not want them to make you believe that there are no fees when there actually is. It pays to be a smart loaner and an even wiser buyer.