Greater Central Texas Federal Credit Union,
3305 E Elms Road
Killeen, TX 76542
Telephone: 254-690-2274
www.gctfcu.net

Secured Loans Vs Unsecured Loans

25. May 2011 Administrator (0)

While procuring a loan it is important to know what kind of loan you should opt for. Basically there are two types of loans available. The first one is Secured Loan – Where certain collateral is kept as security by the lender. The second one is Unsecured Loan – Where loan is given without keeping any collateral. A person needs to make a sound choice between the two. The choice of the same would depend on various factors like:

  • Purpose for which the loan has to be taken.
  • Your financial capability
  • Loan Tenure
  • Monthly repayment capacity
  • Loan amount

What are Secured Loans?

Secured loans as the name suggests are loan that are provided by financial institutions against something that you own (asset). In case the loan is not paid, the lender can take possession of the asset to cover their losses. In case of auto loans, depending on what vehicle you are buying and the cost of the same; financial company decides what asset can be taken as collateral. It can be your property or any other asset that has similar value in comparison to the loan amount.

Advantages of Secured Loans

  • Lower interest rates.
  • Depending on the value of the asset, you can borrow more loan as compared to unsecured loans.
  • As your secured asset assures lender that their money is safe, you can get a loan even if you have a bad credit history.
  • Longer repayment periods.

What are Unsecured Loans?

As the name suggests unsecured loans are the loans given by financial companies and lenders without keeping anything as collateral against the loan amount. As the loan is given without any security, the risk for lender is high. As a result most of the unsecured loans attract high rate of interests and the repayment period is also usually short. The rate of interest is also decided on the basis of your credit history and your repayment capacity.

Advantages of Unsecured Loans

  • You don’t need a property or any other expensive assets to take an unsecured loan.
  • For small purchases, unsecured loans are cheaper than credit cards etc. In case you need small loan for few months, then you should go for unsecured loans to fund your purchase.

To obtain cheap and secured auto loans easily and quickly, consider Greater Central Texas Federal Credit Union only. We can be contacted at 254-690-2274.  

Cheap Auto Loan - 72 Month Auto Financing

Comments are closed
GCTFCU Blog | Checklist Before Getting A Secured Loan
Greater Central Texas Federal Credit Union,
3305 E Elms Road
Killeen, TX 76542
Telephone: 254-690-2274
www.gctfcu.net

Checklist Before Getting A Secured Loan

12. March 2015 Administrator Blog (0)
Secured loans are a type of loan, which require the borrower to mortgage a valuable asset as a security for the loan. People prefer secured loans, as they are easier to obtain as compared to the unsecured loans. The secured loans often come with lower interest rates and allow the borrower to get tax deductions. However, it is crucial to do your homework before applying for secured loans with a credit union.

Here is the checklist that you must consider before getting a secured loan:

Check your credit file before applying

Your credit score is a major deciding factor when you apply for secured loan. It will decide the amount that you can borrow and the amount of interest rate that you will pay. Therefore, it is crucial that you check your credit file before applying for a secured loan. This will help you know whether you stand any chance to be approved or not.

Ensure that you can repay

Before applying for a secured loan, it is advised that you should assess your ability to repay the loan amount. Failing to repay the amount can lead to heavy penalty charges.  It will also have adverse effect on your credit file. By not repaying your loan amount on time, you also put your asset, which you have used as security, at risk. You should calculate your monthly repayment amount by using loan comparison tables to know whether you will be able to afford the repayment amount or not.

Decide the loan period

It is important that you choose the right loan period depending upon your budget. A longer repayment time will reduce the monthly payments but increase the interest amount. Similarly, having a shorter repayment time will involve less interest rate but increase the monthly installment manifolds. Thus you should determine the loan period carefully.

Compare the price

When applying for a loan you need to pay certain costs such as initial valuation and legal fee that are included in your interest rate (APR). You must confirm the costs and compare the prices to get the best deal.

Documentation

Depending upon your credit union and the type of secured loan you are applying for, you may be required to submit some financial and legal documents such as lease agreements, articles of incorporation and your financial reports. You should make sure that you have all the documents required to be eligible for applying.
Comments are closed