Auto loans have come as a savior to many over the decades, with them making cars easily affordable to all and sundry. Even those who have the complete amount required to buy the car usually opt for an auto lveoan, because they believe that they can generate a greater income by investing the capital amount, than the amount they will have to pay as interest over the years. Getting an auto loan can be a tricky process, with the technical jargon and overhead expenses making the situation more complex. Here, we shall discuss one of the major considerations that any car buyer will have to make- a secured loan versus an unsecured loan.

Just like any other personal loan, auto loans can also be of two types- secured and unsecured. The principle difference between these two loans is that, while the former loans require you to give collateral as security to the lender, the latter require no such security. Thus, unsecured loans are riskier for the lender, which is compensated for by an increase in the interest on the loan. These loans rely solely on the promise made by the borrower, and are rarely offered by auto companies, due to the risk involved.

The major advantage of a secured auto loan, is that such a loan involves a lower amount of interest, which is payable over a longer period. This makes it less stressful for the borrower to repay the loan, with the monthly installments being easily payable. Moreover, these loans are easily available, and are rarely turned down. The few disadvantages involved would be the large amount of paper work involved, the need to get an auto insurance, and submission of proof of income, which might be difficult for those who do not wish to project their actual income or does not have appreciable income to get a loan.

Unsecured auto loans, on the other hand, offer the advantage of not having to place collateral. A good credit history is enough to procure such a loan. Secondly, all that such a loan takes is a single-paper application, with no more paperwork required. This makes it less likely for a borrower to be spoofed with unfavorable clauses hidden between volumes of paperwork. Another major advantage is that the buyer does not need to furnish financial statements. This is especially beneficial for borrowers who wish to keep their income discreet. The major disadvantages of an unsecured loan are the greater rates of interest, and shorter periods for repayment.

To obtain cheap and secured auto loans easily and quickly, consider Greater Central Texas Federal Credit Union only. You can visit at 3305 E Elms Road, Killeen, TX 76542 or call us at 254-690-2274. 

Cheap Auto Loan - Secured Auto Loan

• Credit Score - Credit score of a person is an important factor in deciding the amount of car loan they will get. Check out your credit score to calculate as to what amount of loan you would be able to qualify for. Also a good credit score can help you save on interests.
  

• Down-Payment - The amount you pay for down payment decides the amount of loan you would further need. If you have enough savings in your hand then you can easily pay more amount as down payment initially. Higher the amount, the lesser will be the amount of loan you would need, thus making it easy for you to qualify and get approved for a car loan. You can easily calculate the amount of loan and the interest thereon after considering the amount of down payment.
  

• Monthly Instalments -  An important aspect while determining the value of your car loan is the amount of monthly instalments. Plan your budget and calculate what amount of money you can easily pay. You want a loan with monthly instalments that will blend with other expenses you might have. Stick to the rule of not spending more than half of your monthly income on financial obligations towards other parties. Aim for a low budget as you will have an auto insurance to cater to on the purchase of a new car.

• Tenure - Do the rounds with lenders in your area and tell them your preferences based on where you stand financially. For clients with a good credit score, lenders usually recommend short-term loans. These loans have lower interest rates and higher monthly instalments. If you are looking for lower monthly payments and don’t mind higher rates of interest, then long-term loans are your best bet.