Cars are often used as collateral for loans because they are valuable assets that are relatively easy to sell. When you use your car as collateral, you will typically need to provide the lender with the title to the car and proof of insurance. The lender will then place a lien on the car, which means that they have a legal interest in the car until the loan is paid off.
If you default on the loan, the lender can repossess the car and sell it to satisfy the debt. However, if you keep up with your payments, you will eventually own the car outright.
