Savings-Secured Loan Requirements

A savings secured loan is a special lending vehicle that uses a personal savings account as its collateral. This type of lending instrument is unique for a few reasons, but it can have its advantages.

Requirements For A Savings Secured Loan

In order to qualify for a secured loan of this type, the borrower generally will have to have the full amount of the loan proceeds available within a savings account. Rather than take the money out to fund a purchase, a loan against this amount is issued instead. Although specific requirements can vary between banks, they typically include:

• A requirement to have the full amount secured in a savings account
• Reasonable income to cover the loan

The Advantages Of A Savings Secured Loan

A secured loan of this nature does present some advantages for a borrower. They include:

• Ease of approval - Since this is a fully secured loan, approval is likely even with bad credit.
• Low interest rates - In most cases, a secured loan of this type will have a modest interest rate attached.
• The ability to retain savings - As the loan is repaid, earnings on a savings account will continue.
• The ability to rebuild credit - This type secured loan can work well for those trying to build or rebuild credit standing.