Buying a car is a major long-term investment for families and involves a significant outlay of funds and careful consideration as to where those funds come from. For most families, taking out an auto loan is a viable and wise option as it gives them the adequate funds to make an outright purchase while scattering the actual payment over a period of time with monthly payments, thereby lessening the financial pressure on them by a considerable margin. Auto loans are easily available with the bare minimum of hassle if applied for by an experienced credit union. Auto loans can be of two broad kinds- secured auto loans and unsecured auto loans and the basic difference lies in the fact that with secure auto loans the vehicle that is being purchased is taken into consideration as  collateral for the loan amount and there is no collateral in case of an unsecured auto loan. While you decide which kind of loan you want to apply for, it is useful to know about the fundamental differences between these two kinds of auto loans and what each of them would imply for you.

Secured Auto Loans

In a secured auto loan, the car you purchase is worked into the loan agreement as collateral for the loan. Therefore, the party providing the loan retains all rights over the vehicle and you get the right to use the vehicle for your purposes. Once the loan is repaid fully, you receive the ownership rights to the car which is then transferred to your name.

Since the lender in listed as the lien holder in case of a secured auto loan, you need to maintain comprehensive coverage insurance on the vehicle until all loan dues are paid off. If you cannot make payments on time or fail to make them, the lien holder can ask the car to be returned. Inability to do so will cause the car to be legally repossessed to pay off for the remainder of the loan. The upsides are that interest rates are usually low and it is easy to get a loan approved for large amounts, thus enabling you to get the model of car you want.

Unsecured Auto Loans

These loans do not have any collateral mentioned, which means that once you purchase your car you can assume ownership of it immediately. Also, you are free to choose the kind of insurance coverage you want for your car. There is no possibility of an event where your car can be claimed or repossessed but the interest rates for unsecured auto loans can be relatively higher and approval processes might be a little more rigorous than those for secured auto loans.

We at Greater Central Texas Federal Credit Union can help you apply for a car loan in Killeen and deal with all the details. We can be contacted at (254) 690 – 227.

• Lower rates of interest: Credit unions offer favorable interest rates as compared to banks that help in making savings in the long run. The unions are non-profit organizations and are exempt from paying taxes like traditional lenders. Therefore, credit unions offer lower interest rate on home loan mortgages.
• Flexibility: Unlike banks, the credit unions are more flexible in the policy and are cooperative with their members. As the credit union is members owned, all the members have the right to vote on important issues that affect the rates of interests. 
• Lower income requirements: The credit unions may also approve borrowers with lower income. Thus people who might not qualify for a loan in a bank stand a better chance of getting a loan through a union. 
• Other benefits: Some other benefits of taking home loans from credit union include personalized service in comparison to banks, higher payouts on certificates of deposits, faster closing options and even the possibility to miss a payment.