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

Tips To Finance Your Next Car: Secured Vs Unsecured Loans

21. May 2016 Administrator Car Loan (0)
If you are planning to finance your next car, there are different kinds of loan options available. The two most common of them are: secured and unsecured loans. Both types of car loan options have their own advantages as well as disadvantages. Read on to decide which one is better for you.

Secured Car Loans:

  • Definition: In this case, you need to put a collateral against the loan amount which, in most cases, is the car itself. If you fail to repay the loan in the specified time period, the lender has the legal right to sell off the collateral to recompense the principal amount along with the interest.
  • Rate of interest: The rate of interest offered for a secured car loan is usually less as compared to an unsecured car loan. It poses a lower risk for the lender as putting the car as the collateral reassures that the loan will be repaid in time.  
  • Premiums: Secured loans are generally offered on a fixed interest rate, i.e. your premiums will remain constant throughout the loan term. The monthly payments may also be higher to pay off the loan in a shorter period of time.  
  • Borrowing limits: A secured loan tends to have a higher borrowing limit. Therefore, you can borrow more money to purchase the car you want without having to invest much out of your pocket.
Unsecured Car Loans:

  • Definition: In an unsecured loan, you do not need to provide any security to the lender. The loan is approved on the basis of your income, credit history and other related parameters.
  • Rate of interest: The interest rate quoted for an unsecured car loan varies for each borrower. It may depend upon your income, amount of loan and credit record. The interest is usually higher as compared to secured loans because there is no collateral associated and hence offers no security to the lender. 
  • Premiums: An unsecured car loan can be offered either on a fixed or variable interest rate. Hence, your premiums may remain constant or vary according to the fluctuating market rates. 
  • Borrowing limits: The loan amount that may be sanctioned depends upon the value of the car to be purchased, your credit history and income. You can finance a certain percentage of the total cost of the car and the rest needs to be invested from your side.
We, at Greater Central Texas Credit Union, offer both unsecured and secured car loans in Killeen, TX. For more information, you can call us at (254) 690 – 2274 or visit 3305 E Elms Rd, Killeen, TX 76542.
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GCTFCU Blog | Things To Consider When Shopping For An Auto Loan
Greater Central Texas Federal Credit Union,
3305 E Elms Road
Killeen, TX 76542
Telephone: 254-690-2274
www.gctfcu.net

Things To Consider When Shopping For An Auto Loan

14. May 2015 Administrator Auto Loans (0)
When planning to purchase a new car the most important factor to consider is financing option. Although auto loans have made it easier to buy a car, there are various factors that one must keep in mind to ensure that you get the best deal.

Here are some points to consider when applying for an auto loan:
  • Check Your Credit Score: This is an extremely important criterion to get approval for an auto loan. Make sure you have a good credit score, as it affects the interest rate that you will be charged for your loan.
  • Budget: Get a clear estimate of how much you can afford for the initial down payment as well as the monthly repayments. Calculate your monthly income from all sources and the indispensable expenses to know the money you can spare for the car loan.
  • Check The Interest Rates: Before deciding on your loan policy, compare the rates of interest quoted. Even a slight change in the interest rate could make a huge difference in your monthly payments. You must also decide between fixed and floating interest rates.
  • Select Loan Repayment Period Wisely: When you are shopping for a car loan, make sure you take the loan repayment period into consideration. Although long tenured loans may seem attractive in the first place, you may end up paying a lot more as part of the interest rate. Hence, it is always advisable to choose a short-term loan with 3 to 5 year repayment duration.
  • Skip a payment: You should confirm with the agent if you would be offered the option of ‘ skipping a payment’. You may be offered to skip one payment a year but it is helpful in times of a financial crunch. 
  • Secured Or Unsecured Loan: You also have the option to choose between secured or unsecured auto loans. In the former one, you have to put up collateral equivalent to the loan amount which, in most cases, is the car itself. The interest rates and monthly payments are quite low in these types of loans.
We, at Greater Central Texas Federal Credit Union, offer affordable auto loans in Killeen, TX. Our application process is simple and the loan is approved usually within a few days. For more details about our auto loan products, you can call at (254) 690 - 2274 or visit 3305 E. Elms Rd., Killeen, TX  76542.
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