A share secured loan is apersonal loan that is secured using the balance in your savings as collateral. This type of loan generally has lower interest rates than other personal loans because it is secured. Share secured loans are a good option for those with poor or no credit scores.
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How does a share secured loan work?
How It Works In a share secured loan, the credit union places a hold on the amount you want to borrow against. The minimum often is set at $200 to $500, while the maximum usually is between 80 and 100 percent of your share account balance.
What type of account is the loan secured by?
The loan is secured by your savings account, share certificate account or money market account. A share certificate account is similar to a certificate of deposit (CD), but it鈥檚 issued by a credit union instead of a bank.
How do I get approved for a share-secured loan?
Depending on bank or credit union requirements, approval for a share-secured loan may be swift. You apply for the loan, and then the lender verifies your savings and OKs your loan application. Unlike other types of loans, a share-secured loan doesn’t require scrutiny of your credit rating for approval.
How long does it take to repay a share secured loan?
The money is repaid in monthly installments that are generally spread over five to 15 years. Because they offer little risk to lenders, share secured loans typically come with low fixed interest rates, often 1 percent to 3 percent over the dividend or interest rate paid to the account by the bank.