Comparing Stock-Secured Loans and Savings-Secured Loans
Secured loans use collateral in order to receive financing at relatively low costs. There are many options for assets to use for a secured loan including homes, businesses and automobiles. Aside from these traditional forms of collateral, using your savings account or your stock certificates to secure a loan may be an option. These options allow you to get cash quickly without surrendering your savings.
Similarities between Stock-Secured and Savings-Secured Loans
- Your asset, whether in the form of a stock certificate or cash in an account, is placed on hold with the lender
- You use the gains of your asset to offset the interest rate of the loan
- You will receive a loan to value less than 100% of the value of the asset, meaning you will always risk more than you receive
Differences between Stock-Secured and Savings-Secured Loans
- The type of asset used is obviously different; a stock-secured loan uses an outside asset and a savings-secured loan uses an asset within the lending institution
- Stocks are riskier than savings accounts, meaning they can have a higher rate of return while on hold with the lender, making your loan cheaper, or can totally deplete in value, making your loan more expensive
- Stocks are more flexible than savings accounts which have more set terms at the beginning of the investment
Student Loans
- 3 Factors that Contribute to Fluctuating Interest Rates on Student Loans
- What are the Consequences of Defaulting on a Federal Student Loan?
- What Happens when You Default on a Private Student Loan?
- Federal vs. Private: Comparing Student Loan Interest Rate
- Can You Get a Private Student Loan with No Cosigner?
