A share secured loan / line of credit uses the funds in your account as collateral for the loan / line of credit. This collateral allows you to get a better rate than you might on a regular personal loan / line of credit. Therefore, a secured loan / line of credit is great if you have savings and require additional funds, but do not want to deplete that savings.
For a share secured loan / line of credit, your funds must match 100% of your loan balance / credit limit. For example, for a share secured loan, if you would like to borrow $5,000, we will place a hold on $5,000 of your shares (savings). As your loan balance decreases, the amount that is held against your loan will also decease and will be available for withdrawal. For a share secured line of credit, the amount we will place a hold on your shares (savings) will be equal to your credit limit and will not decrease as your balance decreases.
If you had credit issues in the past and are looking for ways to improve your credit score – or lack credit history and would like to start building credit – a share secured loan / line of credit is an excellent place to begin. Since your loan is secured by funds in your savings account, your credit score or lack of score will not be an issue, and your application will be automatically approved.
Also, in most cases, lenders like to see a borrower have at least one year of employment. So if you don’t meet the length of employment requirement, a share secured loan / line of credit may be the answer.
Secured loans / lines of credit are fast and convenient – since your funds will be held as collateral for your loan / line of credit, your loan / line of credit request will be automatically approved. We don't need to order a credit report, and you will not have to provide any income documentation. You don’t even have to be working to qualify for a share secured loan / line of credit. And the interest rate will be lower than a personal loan / line of credit.