A secured loan is a type of loan in which the borrower pledges an asset as collateral for the loan. The loan amount depends upon the value of collateral. A major benefit of secured loan is its affordability in terms of low interest rate.
The choice of a suitable secured loan depends upon a variety of factors. Here are some tips to help you choose suitable secured loan:
1. Loan Amount: The foremost considerable factor is to choose the right loan amount. It is imperative as the loan amount has major impact on rate of interest, EMI, etc. For choosing right loan amount, consider the actual need and the funds available with you. However, make it a point to choose a loan amount that you actually need. Borrowing higher loan amount can have an impact on your financial situation in the future.
2. Collateral: The choice of collateral is important for ensuring loan approval. The value of collateral should be either equal to or higher than desired loan amount. Ask the credit union about allowed collateral and required collateral value.
3. Loan Tenure & EMI: The choice of loan tenure and EMI are inter-dependent. Longer loan tenure results in lower EMI and vice versa. So, when choosing the right loan tenure, focus on choosing the right EMI. Here are some steps that may help you in choosing right EMI:
- Consider your monthly income including total monthly salary and income from other sources.
- Calculate monthly expenses by adding bills, general expenditure, etc.
- Add monthly savings to the monthly expenses to calculate total monthly expenditure.
- Subtract total monthly expenditure from total monthly salary.
- The resulting value can be used as maximum affordable EMI.
4. Rate Of Interest: Rate of interest is governed by type of loan, loan amount, loan tenure, etc. So, consider the variables to check suitable rate of interest.
A great option is to contact the credit union staff for professional assistance in deciding suitable secured loan. The professional team analyzes the financial situation to suggest suitable loan parameters.
Greater Central Texas Federal Credit Union offers affordable secured loan to its members. Members can apply for a secured loan online or by visiting the credit union. For more details on tips to choose suitable secured loan, visit 3305 E. Elms Rd., Killeen, TX - 76542. You can also call at (254) 690 – 2274.