Secured vs. Unsecured Loans: What's the Difference?
When you know that you need a loan to help you achieve your goals, there are many places you can turn to apply for one. Credit Unions tend to have the most competitive rates and offer a variety of loans to meet your specific needs. Not sure which kind you need? No problem - expert lending staff at the credit union can help find the perfect fit for you. Secured and unsecured loans are two very common types of loans that you can apply for at the credit union.
If you have an already well established relationship with the credit union, you may be eligible for an unsecured loan. The lender can trust that you are able to afford the loan and have the discipline to make payments on time. An unsecured loan has no collateral pledged to the loan in case it were to go into default. These typically have a slightly higher interest rate than a secured loan. Examples of unsecured loans include credit cards, student loans, or personal lines of credit.
A secured loan is used in cases of higher risk of defaulting on the loan, or a new relationship between the lender and the applicant. It requires collateral such as real estate, a boat, vehicle, or an RV. The lender will hold the deed or title to the asset until the loan is paid in full. Secured loans can also have longer repayment terms, which means lower monthly payments. Some examples of secured loans inlcude a mortgage, home equity line of credit, and an auto, boat, or RV loan.
Are you in need or a loan, but not sure where to start? Call or text the credit union at 248-549-3838 and a loan representative can help you get started!
« Return to "OUR CU Blogs"