Collateral Loans in OKC
Looking to consolidate debt, pay off medical bills, or make updates to your home? A collateral loan in OKC can make it happen.
A collateral loan, also called a “secured loan,” means the loan is guaranteed by something you own, like a car, home, or other valuables.
With a collateral loan from Focus Federal Credit Union, you receive:
- No payments for 90 days
- No hassle application
- Fixed interest rate
Types of Collateral Loans
Any loan can be a collateral loan. Depending on the kind of collateral you agree to put up, you’ll see various benefits and drawbacks.
The most common type of collateral loans in OKC are:
- Mortgage. A collateral mortgage is a type of loan secured against your property through a promissory note. Because real estate typically retains its value over time, it provides you an opportunity to secure funding.
- Home Equity Loan. Like a mortgage, the equity in your home secures a home equity loan, which also is known as a second mortgage. Officials calculate the equity by finding the difference between your home’s current value and the amount still owed on the mortgage.
- Vehicle Loan. You can use a secured loan to finance a car, truck, boat, RV, ATV, trailer, motorcycle, or farm equipment. The vehicle is collateral for the loan amount.
Assets You Can Use for Collateral
Before approval for a collateral loan, we determine how much your collateral is worth. We’ll consider the fair market value of what you own. In the case of a mortgage, jewelry, or other assets, we determine the appraised value. The amount of the loan will be a percentage of what your collateral is worth.
Collateral to consider:
- Cash in a savings or share certificate account
- Car or boat
- Stocks or bonds
- Insurance policy
- Jewelry, art, or antique
Benefits and Challenges of Collateral Loans
A collateral loan can be an effective way to borrow money. When determining if a secured loan is the best choice for your financial situation, you should understand the benefits and challenges of this loan type.
Benefits of collateral loans include:
- Easier with Low Credit Score. They’re easier to obtain if you have a lower credit score. If you have below-average credit, it will allow you to access financing. Because you’re putting up your property to secure the loan, it can lower the risk and give you more borrowing options.
- Helps to Build Credit. If you have limited or no credit history, a secured loan is one way to build a credit profile. Making on-time payments toward a secured loan can help you establish or improve your credit.
- Allows You to Borrow Money. It may let you borrow more money. Since you are reducing the risk by offering up collateral, you might qualify to borrow more. Depending on the value of your collateral, you may be able to borrow more money than you would be able to with an unsecured loan.
- Lower Interest Rates. Putting up collateral will typically get you access to lower interest rates and more extended repayment periods.
- Short-Term Liquidity. If your money is in assets, you can’t easily convert it into cash. A collateral loan provides money without having to sell the asset.
Although there are a lot of benefits to collateral loans in OKC, they do pose challenges.
Challenges of collateral loans include:
- Require a Valuable Asset. You must have something valuable to offer as collateral. It may be challenging to come up with the collateral necessary to secure your loan.
- Asset Loss. The most significant risk of a collateral loan is if you don’t make your minimum monthly payments on time, the lender can repossess the asset you used to secure the loan. It’s perilous if you secure the loan with your house or car.
- Longer Application Process. We’ll need to determine a value for the asset being used for collateral. This means you’ll need to provide more information than you would for an unsecured loan, making the process of getting the loan longer.
How to Get Started
Before you decide to get a collateral loan, it’s essential to understand the process.
Getting a collateral loan in OKC involves:
- Reviewing Your Credit Score. Before applying, we’ll review your credit score and credit history. A good credit score provides you with more options for a personal loan with lower interest rates.
In general, credit scores fall into the following categories:
- 720 and higher: excellent credit score
- 690-719: good credit score
- 630-689: average credit score
- 629 and lower: poor credit score
2. Determining How Much You Need to Borrow. We’ll want to know how much money you need to borrow. Set a budget and avoid borrowing more than necessary. Larger loan amounts have more interest and higher monthly payments.
3. Choose Collateral. Evaluate the value of your potential collateral, including cash balances, home equity, your car, or other valuable possessions. We’ll require an appraisal to confirm the value before extending the loan.
4. Gather Loan Documents. You’ll want to start gathering your documentation to have it ready to submit your application.
The documents you’ll need are:
- Personal identification (passport, driver’s license, state ID, Social Security card)
- Bank statements
- Address verification (utility bill, lease agreement, mortgage)
- Income and employment verification (W2s)
- Collateral asset information
- Check Loan Rates. Personal loans come with a fixed time in which you pay off the loan. Loans can range from 12 months to 60 months or longer.
A secured loan with Focus Federal offers benefits including:
- NO payments for 90 days*
- NO hassle application
- Loan rates as low as 4.95% APR
2. Submit Your Application. Once you have decided on a collateral loan you submit your loan application.
Interested in learning more or applying for a collateral loan in OKC? Contact Focus Federal Credit Union for help getting your loan process started. We provide access to various loan options and will guide you through selecting the best choice.