How does a secure bank loan work?

Question by tampabay5400: How does a secure bank loan work?
What do you do, what do you gain from doing a secure bank loan?

Best answer:

Answer by Smart1

It’s a loan with something as collateral. Sometimes cash, sometimes a car, house, or land.

Example:
I have $ 1,000 in my savings account that I don’t want to spend, but I need to buy school books which total $ 500. I can ask the bank for a secured loan on my savings account. They will then freeze the $ 500 and extend the loan. Once the loan is paid off, they will unfreeze the funds.

It will most likeley cost you some fees to apply and some interest, but secured loans have much lower interest rates and build your credit.

They are benefitial because you can keep your money in savings. They are also helpful for people with bad credit or no credit. When you pay on time, it increases your credit score.

Most of the time though, people use secured loans to buy houses/real estate, cars, or to get business loans.

If you use something besides cash, If you can’t pay, the bank will seize the property and sell it to try to get enough to pay the balance of the loan. If it is not worth enough, you will still owe the difference. If it sells for more that what you owe, the bank will usually pay you the difference.

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