Yusra3
VIP Contributor
A share-secured loan is a type of loan offered by credit unions where you use your own shares (deposits) in the credit union as collateral. It allows you to borrow money while still earning dividends on the secured funds.
Here's how it works: You'll need to have a share certificate account or other deposit account at the credit union with enough money to fully secure the loan amount. The credit union will freeze those funds while you take out a loan for an equal or lesser amount.
The frozen shares serve as collateral to reduce the credit union's risk. If you default on the loan's repayment, the credit union can withdraw from your shares to recover the debt.
Share-secured loans typically have low interest rates since they are fully secured. They can be useful for building credit, consolidating debt, or borrowing money when you may not qualify for other loan types.
As long as you make on-time payments, your shares will continue earning dividends. Once the loan is fully repaid, the full share amount becomes available again.
Here's how it works: You'll need to have a share certificate account or other deposit account at the credit union with enough money to fully secure the loan amount. The credit union will freeze those funds while you take out a loan for an equal or lesser amount.
The frozen shares serve as collateral to reduce the credit union's risk. If you default on the loan's repayment, the credit union can withdraw from your shares to recover the debt.
Share-secured loans typically have low interest rates since they are fully secured. They can be useful for building credit, consolidating debt, or borrowing money when you may not qualify for other loan types.
As long as you make on-time payments, your shares will continue earning dividends. Once the loan is fully repaid, the full share amount becomes available again.
