Defaulting on a car loan, which is by very definition a secured loan, will result in the vehicle being repossessed. If you realize you cannot make your agreed payment, start by proactively contacting the lender and trying to work out a reduced payment rate.

Although car loans aren't typically made through the banks for used vehicles, you may wish to consider a used car to keep depreciation and purchase price lower. Different car manufacturers offer financing for used cars and personal loans for lower priced vehicles may also be an option.

If you have the choice at the dealership between going with either super low interest or no money down, it is typically more advantageous to take out a loan and put the money down up front, opting for a lower interest rate. You may be able to work both a smaller personal loan in with a vehicle loan and still end up paying less over the term of the loans.