• Your Financial Situation: Before applying for a secured loan, the first thing to do is to assess your financial situation. Figure out how much loan you need, suitable loan term, feasible EMI, etc.
• Credit History: Once you have made up your mind to get the loan, check your credit history and see how it will affect your loan application. A good credit score increases your credibility.
• Loan-to-Value: Assess the loan-to-value in order to know your borrowing capacity and the interest rate that will suit your financial circumstances. A lower loan-to-value translates into a better interest rate.
• The Interest Rate: Inquire about the interest rates offered when looking for a secured loan. Ask the loan officers about suitable options and ways to secure a better rate.
• The Term Of The Loan: The period over which you have to repay the loan also impacts the cost of the loan. A shorter period of repayment may lead to higher interest rate and vice versa.
• Fees And Monthly Payment: When obtaining a secured loan, keep in mind that it involves various payments such as application fee, loan origination fee and cost of appraisal.
• The Application Process: Credit Unions offer borrowers the choice of applying online. During the process, applicant is required to provide details such as the name, address, date of birth, income and employment status, etc.

• Enhances Credit Rating: Secured loans are easy to acquire even if the borrower’s credit rating is low. However, a borrower can work towards building his credit score over time by making timely payments towards his secured loan.
• Lower Interest Rates: Another major reason for borrowing secured loans is their rate of interest. Since the loans are secured with a collateral, lenders feel more confident and may disperse loans at lower interest rates.  
• Flexible Terms: Borrowers who avail secured loans enjoy flexible repayment terms. A consumer can choose a repayment schedule that suits his financial circumstances. The repayment terms may be as long as 30 years. Lenders offer longer terms because real estate pledged as security, usually appreciates over time and this adds to the value of collateral while the loan is being repaid.
• Usage: Secured loans can be used for a variety of purposes provided the purpose is legally valid. A consumer can use the money for investing, home improvement, weddings, funeral expenses, moving expenses, etc.
• Larger Loans: With secured loans, borrowers enjoy the benefit of being able to borrow larger amount of money for a longer duration. This is because of collateral in the form of tangible assets guaranteed to the lender by the borrower. Lenders know that if for any reason the borrower defaults to pay back the loan amount, collateral can be sold to recover the unpaid amount of loan.
• Easy To Acquire: The main requirement for a secured loan is collateral. Thus, if you have collateral in the form of a valuable asset such as a piece of real estate, a car, precious jewelry, a house or deposited cash, you can easily acquire a secured loan.

• Total Amount Of Interest Paid: Even though a long tenure can seem enticing due to the lower monthly payments, it is important to take into account the total amount of interest that you will be paying over the entire duration of the loan. Longer tenures mean a higher amount of interest and vice versa.

• Loan Amount – The tenure period also depends on the amount of loan you take and your capacity to repay it. Again the amount of loan that you take depends on the car you wish to get financed. Generally, higher the amount of loan that you take, more will be the time you would need to repay without disturbing your monthly budget. If your sole reason for choosing a long-term loan is to own an expensive car, then it is prudent to opt for a cheaper car, or a used one. This could mean being able to afford the monthly payments for a shorter time period.

• Income Of The Person – The tenure period depends on the amount of money or installment that a person can pay on monthly basis. This further depends on the income as well as expenditures of a person. Make sure that you opt for a loan period that requires you to pay an amount of installment which you can comfortably pay off on a monthly basis.

• Resale Value: The resale value of your vehicle keeps decreasing, the longer you keep it. This is an important consideration before signing up for a long-tenure loan. Trying to sell your car at the end of a 3-year loan term is sure to be a lot easier than after a 5 or 7-year period.

View Full Image