What is a Savings-Secured Loan?

Sometimes a secured loan is the only way a person can get a loan. If you are just starting out, or otherwise have bad credit, it’s hard to get a lender to give you the loan that you need. If the loan is to be a relatively small amount, then you can perhaps consider using your savings account as collateral.

Why Choose a Savings Secured Loan

When someone wants to purchase a big ticket item, they usually don’t want to spend all of their on hand cash for the item in question. The on hand cash is generally for emergencies after all.

An alternative is to obtain a loan and that’s what most people usually do. It’s not quite so easy for the person who has no credit, or their credit is bad. They can then usually offer their savings as collateral and for the institutions who offer these types of loans will accept that.

As you make the payments on the loan, the institution will begin to release the hold on your funds based on the amount of the principal that you have repaid.

The savings secured loan is an excellent product that can be used to leverage bad credit into good credit. You would typically borrow the minimum amount allowed, use your savings as collateral and make the monthly payments on the loan. Once the loan has been satisfied, then that will show up as a satisfied account on your credit report.

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