Is a share secured loan right for you?
Share secured loans are perfect for first time borrowers or those trying to repair their credit history. A share secured loan is one that uses the assets in a savings account as collateral for the loan. When you are approved for a secured loan, an amount in your savings account equal to the loan is frozen for the term of the loan. The money becomes available in your savings again as the loan is paid off. Some lenders may freeze the total loan amount for the entire term of the loan, while others may release funds in stages as you pay down the loan. In this case, the secured amount will decrease as you pay down the balance. Best of all share secured loan rates are typically very competitive, because the loan is secured. So, if you’re having trouble getting a low-rate personal loan, ask your credit union lender about a share secured loan.
Improve your credit history with a share secured loan
A Spirit Financial Credit Union share secured loan can also help you to improve your credit rating if used responsibly. You can improve your payment history, an important factor in your score, by making all of your current payment on time. A healthier credit rating means more borrowing power in the future. A share secured loan may also add to your credit mix, which is another positive factor in your credit rating.
The benefits of share secured loans
· Share secured loans can help you establish a credit history
· Share secured loans offer competitive interest rates
· A share secured loan can help you improve your credit rating
· Share secured loans are convenient and easier to get
· A share secured loan can help you from dipping into your savings
· Share secured loans can be used for any purpose
In conclusion, secured loans are easy to qualify for, even for those with fair or poor credit. Because they use savings as collateral, share secured loans offer little risk to lenders. For the borrower, it gives them an option of borrowing against savings and continuing to earn dividends rather than liquidating an account to make a purchase or pay an unexpected expense. Finding the loan that’s right for your individual needs and situation is important. As with any loan, we encourage you to carefully consider the financial implications before borrowing. When you take out a secured loan you risk losing the assets you pledged as collateral if you don’t repay the loan.
When considering a share secured loan, there is information you will want to gather from the lender before deciding to borrow. Here are some questions to ask your lender:
· The interest rate of the secured loan
· The term of the loan
· All fees associated with the share secured loan
· Amount you are eligible to borrow
· Your monthly payment amount
· The collateral requirements
· How long it will take you to obtain the loan
Looking to build a credit history or have a large purchasing coming up and you don’t want to dip into your savings? Then consider using your savings as collateral with a share secured loan. At Spirit Financial you can opt to put your savings or a certificate deposit to work for your borrowing needs. We make the borrowing process easy, allowing members to borrow up to 100% of their shares value. You can apply for a Spirit Financial share secured loan right online.
Not a member of Spirit Financial? If you live, work, worship or attend school anywhere in Bucks County, you’re eligible to join. Learn more about membership.