A car loan is a loan specifically for financing the purchase of a new or used car. It falls under the category of consumer credit. This type of loan is triggered by the purchase of a car and cannot be used to buy any other item, just like a motorcycle loan. It is therefore considered a secured loan.
Thus, it differs from a personal loan, which aims to bolster cash flow. A car loan, or auto loan, is therefore viewed more favorably by a banker than a personal loan.
Whether you're buying a new or used vehicle, the way car loans work remains the same. Of course, prices are very often different between a new and a used vehicle. Consequently, the loan amount isn't the same. But in the case of a new vehicle, the lender takes into account the cash flow from the vehicle's resale if this occurs within the first 5 years after purchase.
In the case of a used car, even if the price is lower, the cash flow from resale is often less. Before taking out a car loan, carefully calculate your borrowing capacity to get an idea of the maximum loan you can request.