An auto loan is generally classified as which type of debt?

An auto loan is classified as fixed-rate, secured debt because it is a loan specifically used to purchase a vehicle, with the vehicle itself serving as collateral. This means that if the borrower fails to repay the loan, the lender has the right to repossess the vehicle. The "fixed-rate" aspect refers to the fact that the interest rate on the loan remains constant throughout the life of the loan, providing predictability for the borrower in terms of monthly payments and overall budget planning. This characteristic distinguishes it from other types of debt, such as variable-rate debts, where the interest rate can fluctuate. Additionally, the secured nature of the loan, with collateral backing it, offers lower interest rates compared to unsecured debts, which have no collateral.