An automobile loan is a type of loan used to pay for the purchase of a car or motorcycle. The car serves as collateral for the loan, so the lender retains ownership of it until the debt is settled in full. The cost of the vehicle, the borrower's credit history, and their capacity to repay the loan are taken into account when determining the loan amount. Vehicle loans often have a predetermined repayment period, which typically ranges from 24 to 84 months, and fixed or adjustable interest rates. The loan is normally repaid over the course of the loan in equal monthly payments that cover both the principal and interest.