If you have money in your savings account or on deposit in a share certificate with your Credit Union, you may qualify for a share pledge loan. These loans are beautifully simple: you use the money on deposit in your account as collateral for the loan you wish to take out from the Credit Union. The money stays in your account and continues to accrue dividends; your access to the funds are restricted, of course, since they are being held as collateral for your loan, but it is still your money. As you repay the loan month by month, your available balance will be adjusted upwards to reflect the release of the collateral.
There are generally no restrictions on what you can use a share pledge loan for. Buy a home, add on to your existing property, take a vacation, pay for a child’s education, buy a boat, or just refinance high-interest credit. … the only limit is what you’ve managed to save. Since share pledge loans are an extremely secure loan for the Credit Union, the interest rates can be as low as 1.5% APR. (APR = Annual Percentage Rate)
Share pledge loans are also very easy to apply for. Since they are available only from your Credit Union, the financial institution already has almost all the information they need to process the loan request. Since the loan is 100% collateralized with your savings, the approval process is a breeze. At most Credit Unions all you will need to do is make sure that the institution’s information on the account holders (name, contact information, etc.) is up to date, and sign the note. There has never been a simpler way to take out a loan.