When applying for a loan at credit union, you will come across two options - secured and unsecured loans. It is important to know about both these types of loans to make sure you make the right decision. Make sure you analyze your requirements such as income, debt, credit
history and budget before choosing a loan plan at your
credit union.
Research thoroughly about various lenders so that you can get a loan at
low interest rates.
What's The Difference Between A Secured And Unsecured Loan? Secured Loans These are backed by a collateral such as a car, property, stocks or any other valuable asset. If the borrower fails to repay the loan, the lender may take possession of the collateral. Secured loans can be a perfect option for those who require to borrow a large sum of money to meet their long term financial goals.
Unsecured Loans An unsecured loan does not involve the use of collateral. As compared to secured loans, it generally has a shorter repayment term and a higher rate of interest. These types of loans are approved on the basis of income, credit history and various other factors.
Benefits Of Secured Loans: Low Interest Rate: A secured loan is offered at low interest rate as the collateral serves as a ‘security’. If the loan is not paid on time, the value of the collateral is used to repay the amount. On the other hand, unsecured loans have a higher rate of interest as the lender lacks assurance of loan repayment. Secured loan can be a good choice if you are looking for easy financing options.
Longer Repayment Term: In case of secured loan, you get a longer time to repay the amount which can lower your monthly premiums and ensure financial stability. It also relieves the pressure of paying a higher amount of money. Such types of loans involve a highly valuable asset as a collateral. Thus, credit unions provide longer time for repayment. On the contrary, an unsecured loan has a shorter repayment term.
Higher Borrowing Limits: If you are looking to borrow larger amount for any major investment, you must opt for secured loans. The borrowing limits are usually proportional to the value of the collateral. For instance, you can choose a secured loan if you need to buy a home or a car. While in case of an unsecured loan, only a small amount of money can be borrowed as there is a risk of non-payment.
Easy To Apply: You can easily get a secured loan regardless of your credit history and employment status. Credit unions do not impose any strict rules for loan approval or check for any late payments. This also reduces the paperwork involved in the process. In case of an unsecured loan, having a good credit score is important to get qualified.
Greater Flexibility: A secured loan offers greater flexibility as compared to unsecured loans. It can help you to easily convert a fixed-rate loan to a variable-rate loan. You can also vary the premium amount according to your convenience. You will have to pay a fixed interest rate for the unsecured loans as they have no security.
Considering their various benefits, you can choose a suitable loan plan accordingly. It is important to read the terms and conditions carefully to avoid any hassles later.
We, at
Greater Central Texas Federal Credit Union provide quick and affordable
secured loans to our members in Killeen. The staff at our credit union helps to choose a loan plan according to your requirements. We also offer direct deposit, payroll deduction and other online services to provide you a better lending experience. For more information, you can call us at
(254) 690 – 2274 or visit our credit union at 3305 E. Elms Rd., Killeen, TX 76542. You can also apply for a secured loan at our website.