Auto loan

An auto loan is a kind of money that someone lends you so that you can buy a car.

Imagine you really, really want a toy that costs a lot of money. But you don't have enough money to buy that toy right now. So, you ask somebody to give you some money to buy the toy, and you promise to pay that person back later. That's what an auto loan is!

When you get an auto loan, someone loans you money so that you can buy a car. You get the car you want, and then you pay back the money bit by bit, over time.

The person who gives you the money (usually a bank or a financial company) charges you extra money for the loan called interest. It's like an extra charge for borrowing the money so that they can make some profit too.

You need to repay the loan through “installments” which is like when a friend lending you money asks for some of it back each month until you pay it all back. Similarly, you will have to pay back the money in monthly installments with interest added to it. Once you have paid back all of the money and interest, the car is all yours, and you don’t have to pay any more money for it!

So to summarize, when you take an auto loan, someone loans you money so that you can buy a car, and you promise to pay them back over time (with a little extra money added on top).