Credit Union Forms: Secured and Unsecured Lending
Credit unions serve various demographics across the United States and need to offer the appropriate loan products to best match their members' needs. Criteria such as age, income, and credit score all factor into what type of loan is offered to a member. These variants will help a loan officer decide whether to offer a member a secured or unsecured loan.
The difference between a secured and unsecured loan:
A secured loan is collateralized by an item or type of collateral. Most often this collateral is an automobile or the equity of a home. If a borrower defaults on the terms of the loan, a creditor may take possession of the collateral through repossession of the property and/or foreclosure of the security interest. Collateralized loans are generally considered to carry less risk, and as a result, creditors are able to offer lower interest rates, while expanding the amount of credit they can extend overall due to an increase in the under-served or credit-challenged market. Any loan that is not secured would fall into the category of unsecured.
Oak Tree Business Systems, Inc. provides credit union forms for both secured and unsecured loans. Both closed-end home equity loans and open-end home equity lines of credit (HELOCs) are secured by the real property pledged as collateral in connection with that extension of secured credit). Oak Tree’s open-end consumer lending forms can be constructed to support both secured and unsecured lending. For secured lending, the forms will contain many provisions required to properly support the various aspects of open-end, collateralized consumer loans (such as modified advances, security, other security, and default provisions) together with other customizations as may be needed in order to support a particular type of collateralized lending.
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