Car loans broadly fall into two categories: secured and unsecured. Secured loans protect the lender against the case of debtor defaulting and have lower interest rates. Unsecured loans, on the other hand, have higher interest rates, but are asset-free. Qualifying for an unsecured car loan is, as you might have guessed, way more difficult than the other way around.

Car loans can be quite expensive simply because of the rate that cars depreciate at, as cars fall in value everyday. This means that over time, if someone can’t repay their loan they can give up their car as security, but because of depreciation, the lender might take a loss. This means lenders have to offer higher rates to compensate for this.

You can pay the amount you owe early if you like, but you might want to check with your car loan provider for any fees you might incur in paying it off early.

To apply for any car loan, you will first need to prove you are the person you claim to be. Your passport or driver's license are usually sufficient in that regard, but sometimes the lender may ask for additional documentation. Car details, including dealer info, engine number, and registration also need be submitted. As for other requirements, they vary depending on the loan type. For unsecured loans, most lenders will require your credit history records and copies of bank statements.