When it comes to the Cash-Secured Loan, it is the loan where you make use of your own personal funds in form of the collateral to get more money as a loan. Basically whatever savings you have makes the borrowed loan secure just like your mortgages secure other kinds of loans.
Essentially this loan needs you to keep your funds safe as savings or get a deposit certificate till your borrowed money has been returned in full. Now because you get the money from the same financial entity where you have kept the savings of your own money the bank takes it that there isn’t any risk involved.
How the Cash-Secured Loan Works?
When you deposit your money you then submit the application for your loan against your personal funds now according to the financial entity involves this cash-secured loan may be taken as the lump sum loan or a credit card or as a line of credit.
The Time and Amounts of Cash-Secured Loan
There are banks which will let you borrow the loan against a balance of only $50 as the deposit while some entities do need at least $3,000 deposit for the cash-secured loan and these are the findings of Nolo. Then the borrowed loan amount can be as much as $50,000 but the credit cards can become available on a a $300 deposit. While some banks will lend you half your deposit amount others will give you full.
Now the payback time usually is between one to five years and some loans are paid back as installments or you can pay all of it at the end.
The Perks for the Borrowers
If you are someone who doesn’t have a long credit history or poor credit then these cash-secured loans will amp up your credit details. They will allow you to borrow even when you have a poor credit. Now getting this cash-secured loan approved is a speedy process and you will get the money almost the net day and you can make use of it anywhere you want such as a holiday or renovations or business investment etc.
Also the interest is lower than the other loans and once you are done with the repayment you will still have your savings.